I have a 88 Conquest as well and have had problems with the overdrive. However, my problem is the opposite, as the cancel switch has no effect and my car always had overdrive canceled. I disconnected the overdrive cancel solenoid on the transmission, so that the car would always be in overdrive, much like the way your car acts. Answer to Question 1: You can't downshift the car into 3rd gear when you are in overdrive. Putting the shifter in 2nd, does just that, downshifts you to 2nd. Only way to get back to 3rd is to push the pedal down far enought to intiate the kickdown switch. Answer to Question 2: I would recommend that you test the voltage on the brown wire that connects to the overdrive cancel switch on the transmission. This solenoid is on the drivers side, near the front of the tranny. You should have voltage when the switch is depressed. If you don't then overdrive will always be active. If you have voltage then the problem has to be the solenoid itself.