Is it OK to drive with my o/d turned off. The majority of my driving is done in city conditions, 40 mph, stop signs/ lights.

Yes it's fine to drive with your O/D off it just put's your vehicle in a lower gear mostly meant for pulling trailers, If you want to be fuel efficient I would say leave it on but depending on how many gears you have for example, Chevy truck has 123 and D - 4 Turning the O/D off puts it in 3 and you could easily still do 70MPH.

you won't get any benefit of driving with it off. if you aren't going fast enough to use it, the trans won't shift into it. only thing you will do is wear out the switch, because on a dodge, you have to manually turn off the O/D each time you start the motor. the default position is on.