I have a sneaking suspicion that you could probably find a decade newer V70 for the combined cost of the genuine Volvo converter and having it installed!
Around here (Toronto area) the automotive recyclers are paying top dollar for "retired" cars-- last year I got $1000 Canadian for my 2000 V70. It was still a pretty solid car, but I couldn't justify repair costs exceeding its value to keep it on the road.
I have had decent luck with weld-in Magnaflow cats, but I have never had one done in a Volvo. I think I paid $250 Canadian the last time I had one done, so it isn't a huge gamble, and it might take you to 30 years of ownership on your 850...
Good luck!
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