Volvo: Sensor Lights on 1999 v70, engine management system, automatic transmision

Question
My check engine light stays on and almost all of the other warning lights come on and go off in various combinations at will. When some of the lights are on the automatic transmision doesn't seem to recognize what gear it should be in. Sometimes the car runs rough at ideal but works ok once the accelerator is pushed.
When the sensor lights aren't on it runs fine.

My mechanic says it is a sensor( $700 new) that needs replacing but there are so many combination of system lights coming on and going off that this doesn't seem right.

Any thoughts

Answer
George,
When the check engine light is on that means there are faults in the engine management system and the codes need to be read and faults corrected, then the light can be reset.
Other warning lights mean that those systems also have codes that need reading and the faults fixed, then those lights can also be reset.
I do not agree with the person working on your car to say that a $700.00 sensor is going to fix it all. There is not one one control unit or sensor that is in common with all the systems you said have warning lights on.