I have an '86 300E, similar engine and oil sender location. I need to replace the oil pressure sender and I'll have a look at the harness while doint that job. Thanks.
P.S. There are many '80s Volvo 240s with wiring harness problems. I've repaired this on many of those. The worst spot is just under the front of the engine where the harness often gets oil soaked when the front seals leak. Same result on the wiring insulation.
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1986 300E
1993 Volvo 940 Wagon
1984 Volvo 240 (daughter's)
1976 Dodge 1/2T pickup, gas hog