B2 failure usually results in no forward gears, so it's unlike to be that.

The governor drive gear is plastic, it can break, but you are correct, it usually results in no upshift ever.

Upshift at redline only is syptomatic of a stuck kickdown, so if yous is working, I'd suspect a broken spring in the valve body -- the kickdow spool it stuck in kickdown.

you might try running at full throttle while clicking the kickdown on and off on the change whatever is stuck will free up, but I would personally consider a valve body swap. You can check the governor gear at the same time, but I'll be it's fine since you actually get upshifts if you wait long enough.

Peter

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1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!