1994 Volvo S40 Fourth gear disengaged and the "button&

If you do a lot of stop and go driving then it is recommended you disengage the overdrive so that the transmision does not go through so manygear shifts prolonging the life of the transmission. The only time you would want the extra gear is when doing long none stopped trips for better fuel economy on the highway. If there is a fault in the transmission control module, the arrow light comes on like a check engine light would to alert you there is a problem. You will need to take it in to a shop preferrably a transmission shop to have it diagnosed.