Sydney940 Before ordering the part, it might be worth checking out the connection to the diff sensor.
In the cargo area of the vehicle (I forget if yours is a wagon or sedan) there'll be 2 harnesses coming out of the plate used to access the fuel pump and sender. The diff sensor signal harness should be the one that passes though a little black connection box.
Link below is to the 940 1994 wiring diagram.
https://ozvolvo.org/archive/?book=908864f399
See Green Book pages 116 and 117 (PDF pages 118 and 119) for the VSS wiring.
That 'black box' is shown as the 'seal'.
First check I'd make is at connector 7/33, which is on the diff, to see if it's corroded or damaged, and make sure it's got good continuity to the 'seal' box junction. (IMHO, 7/33's the most likely culprit).
If that all looks good and tests hunky dory, check the connection at connector C1, terminals [11] and [12], which should go straight to the instrument cluster. You never know.... one or both of the VSS wires may have insulation damage from rubbing against the body and may be shorting to earth. (A lot can happen with 30+ year old wiring).
(This reminds me also that I need to set up my signal generator and do some tests with 240 and 940 electronic speedos, and see what frequencies give what readings on the speedos.... If I knew those settings, I'd suggest injecting a signal at connector 7/33 and seeing what readings you get at the speedo).
