I own a 95 Avalon, which is for all purposes is the same vehicle, and have had the same problems. I spoke to one of my friends who is a toyota mechanic. He told me that this is due to what is refered to as a lazy solenoid. The light comes on due to the fact that the computer system things overdrive should have engaged and it tokk too long for it to kick in. Unfortunately the only fix is to have the transmission dropped and the solenoid replaced.
Fortunately though the only effect this probles causes is a slightly delayed shift into overdrive (which is usually unnoticeable) and if the solenoid goes out the loss of overdrive meaning the vehicle will remain in 4th gear and run at a slightly higher RPM than with OD.
