In reading recent links, the gear box selector switch may be bad or loose wiring. Where is this located and how much does the part cost?
alternating flashing gear box control wiring? on 1992 Volvo 960
The gear position sensor is located under the 960, it's next to the exhaust and the transmission. The wire connector is next to the dipstick tube. Becareful when separating the connector, it's very brittle sometimes. You might also have to lower the transmission slightly to remove or move the selector shaft out of the way. The best way to have this repair done correctly is to bring the 960 in to a local repair facility because it's a pretty involved process. Good luck, -Sam