That transmission has an external linkage, and the problem is worn out bushings in the linkage by the the shift lever. Lots of little parts and an PITA, but doable.

There is nothing at all wrong with the tranny, the shift lever is not operaiting the correct shift links due to wear.

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!