Hello Rat Dangerous,
I just did the same swap on my '94 940. A few points to consider;
1. Read this thoroughly, it will save you a lot of grief. The Volvo UK club has a HUGE resource library.
https://www.volvoclub.org.uk/faq/VolvoAW70M46Conversion/AW71M46Conversion.htm
2. Mine was a wagon so I swapped out the 4.10 locker for a 3.73 from a sedan. Low gear in the M46 is low as it is so a taller rear end is a benefit, small as it may be.
3. Hopefully you have a driveshaft from a 740. If not you will need to shorten your shaft and add the flange for the rubber coupling. Bear in mind most driveshaft shops can't balance a 2 piece driveshaft with a rubber coupling. You may have to have a machine shop knock up a adapter to bolt to the rubber coupling and clamp in a lathe chuck. Hopefully you have a good driveshaft shop in your area?
4. Hopefully you have the '58 hole' flywheel from the 740 as the engine management computer via the crank position sensor needs this for correct timing. Have both surfaces (pressure plate and clutch disc surface). cleaned up by a machine shop.
5. Purchase a complete clutch set (pressure plate, clutch disc, release bearing and pilot bearing. Sachs is the original supplier.
6. Does the bell housing have the notch for the crank position sensor? If not, you will need to cut that out - easy to do. Use the AW71 as a template.
7. Rebuild kits are no longer available for the master or slave hydraulic cylinders so new is your only option.
8. If you remove the bell housing from the gearbox make sure you grease the new paper gasket prior to reinstalling (Volvo service manual states this). If you don't grease it your gearbox will start to sweat ATF along the lower edge of the gasket.
9. Be prepared to swear a lot when trying to install the gearbox. The engine needs to be at an extreme angle for the bell housing to clear the floor tunnel and the flywheel. The flywheel is very thick and the cause of the problem.
10. I installed the bronze bushing kit from IPD and it works quite well.
11. Be prepared to do some modifications to the wiring harness to adapt the overdrive circuit. The 940 instrument cluster has the '5th' gear light so it is a simple matter of wiring that light in. The manual gearbox relay is no longer available on this side of the Atlantic (Skandix carries it, not cheap including shipping). I ended up using a simple dash lighted rocker switch triggering a relay (I used the same one as the fuel injection system). Make sure your 4th gear switch on the gearbox acts as the ground for the relay. Ensures O/D can only be engaged in 4th gear.
12. Don't forget to install both the clutch and brake switches to ensure the cruise control disengages when either the clutch or brake pedal is used.
13. Be gentle with your gearbox - ALWAYS use the clutch when engaging and disengaging O/D.
14. If you run into issues adjusting clutch pedal engagement let me know, it is easy to make and adjustable push rod.
15. The M46 is a 'slow' gearbox. So need to move the shift lever slowly between gears. Trying to shift quickly will result is grinding gears.
16. There is a chap in California that sells rebuild kits and parts including synchros for the M46. I have the contact details somewhere if you need it. Check the synchros by CAREFULLY removing the top cover.
17. If you are technical, find a copy of the Volvo M46 Service Manual. They come up on eBay and are not that expensive.
I'm sure I've forgotten a few points if I recall anymore I'll update this thread.
Hopefully the above helps.