I had the XC70 pior to my current car, with the D5 and that engine was brilliant for towing. I too found the autobox seemed to hover between gears, it wasnt a fault with the box per se, just that it alwatys seemed to be on the point of changing up or down. The OP appears to have the old fashined box with D,1,2,3. Surely he would always be in drive unless specifically needing a lower hold. My box, I always towed in sequential so I had full control over it and that made a big difference to fuel economy.