My 95 850 (4 spd automatic) had an issue similar to this. After cleaning the PNP and replacing the battery, it persisted.
I eventually ended up replacing the ignition switch. That fixed it.

The "No brake in the middle of a curve" rule is 1 I needed to know a couple of months back. Once the rear lets go when you go in too hot, its gone. The car survived but my dignity dint fare too well. Being FWD (850), torque steer is always going to be an issue in 1st gear but as a whole, i...

Was going to work on it today but ended up cleaning the yard up. Tornadoes really tore Tn up. I feel fortunate that all I got out of it was a messy yard and a tipped over shed. Others werent so lucky. Im sure you all pointed me in the right direction and the information here is PRICELESS. Thank you ...

MIDOL! 8) :roll: Hahaha yea. Instead of cleaning the switch, Im just getting a new 1. Less to deal with later. The pleasures of owning this jem far outweigh the pains though. Thanks for the replies....even though the problem is'nt solved yet, I do value the time you all have taken to help this Volv...

The starter was supposed to be brand new....Cost $130USD. may be taking it back before this is over.

Edited typo.... was $130 at Advance Auto.

I forgot to mention,
The upshift light flashes only when this happens. It will continue to flash until the car is shut off. If it starts right up the next time, theres no flash.If it sits for a few minutes after the initial attempt, it will start.
Sorry about not mentioning this. Brain fart

Got the wife an 850 (a car Ive always wanted btw) and its a great car. Its a 95 (nonGLT) 2.4 auto w/ econo mode. Has 70k with a new starter installed 5k miles ago. The problem: Starts and runs fine, great realy but every so often it wont start. It acts like theres no starter in it. Ive looked at the...