Volvo 270 outdrive reverse lock mechanism set up and adjust

Just bought 1981 Glasply with 270 outdrive. First two times I drove it all was fine. Third time heard a clunk at the outdrive and found I couldn't raise the outdrive with the power trim switch. Ended up having to pry it with a screw driver to get the jaws to release while trying to load out at the boat ramp. Goes up and down fine but if I put it all the way down the catch engages and again won't release. Have all the manuals so went through entire set up and adjustment but if I adjust it so it can engage it won't release. The reverse lock lever moves a tapered collar but that collar doesn't appear to engage or restrict the catch in anyway. I can't see how it ever did anything to begin with. Now I am using the boat but can't give it any power in reverse or the outdrive will lift up. I adjusted it so it can't engage at all.
Any ideas? The collar and catch appear to be as per the diagram in the manual. Don't think any broken parts.

When you depress the collar ( by hand with drive up for simplicity) the latch should only be able to be moved a very short distance. See clearance specified. See step 9, b) and c). If this is good, then the latch is worn and needs to be replaced.

View attachment volvo manual REV interlok.pdf

Thanks Bob. The collar moves fine but doesn't move the latch at all. Also the head of the ram that lifts the motor doesn't push the rod down that would release the latch either. The collar that is supposed to stick up is gone. Guess I need some new parts.

Collar does not move the latch. It prevents the latch from moving i.e. disengaging from cross pin on transom shield (when in reverse).

Re: "head of ram....doesn't push rod down". Rod normally protrudes above "ear" on yoke about 1/2" or less ( as I recall). Ram is supposed to push the rod flush with the "ear" on the yoke, i.e., rod get pushed flush before ram attempts to move the drive up.

All parts need to be properly installed in order for this system to work. Also, inspect tips of latches ( 5 in dwg on rt side) for excessive wear where they engage the cross pin on transom shield before ordering parts as they may need to be replaced as well.

Swedish engineering for ya. The last one reverse lock mechanism I adjusted I ended up pulling the drive off the boat to access the adjuster. Once adjusted it worked perfectly but what a PITA to adjust it. Also having the drive off I was able to inspect the bellows, replace a shift cable and the goose neck housing and gasket all in one afternoon.

I have the same issue as the OP. What I have done is attach about a 5 foot length of thin rubber coated wire to the latch and run the other end of it up and over the transom and secure it around something inside the hull. When the latch does not disengage and I want to raise the drive, I pull up on the wire from inside the boat and that disengages the latch and the drive will then raise. This does not address the issue of the drive lifting up in reverse, however.

Sounds like the release rod for the reverse lock may be bent. Raise the tilt ram all the way up and see how far the rod is sticking up for the reverse lock. If it sticks up about 1/4 inch just see how easy it pushes down it could be the reverse latch is sticking and the rod just flexes when the ram pushes it down. Be sure and block the drive up good when you put your hands under there and make sure the components al move nice and easy. Just pull down on the reverse latch and the rod should move rather easy.