As MIJ suggests, sounds like your ignition switch. Just had a similiar problem with our 96 850. The car would not shift out of Park, the ABS light was on and all kinds of screwy things with the lights (no headlights at times etc. Wiggling the key generally worked. The electrical portion was at fault, not the part that the key fits. It is fairly easy to replace and directions are on Bay 13. You need a special tool to make your life a lot easier. The torx screws are located at the bottom of a deep recess so you need a loooooooong torx screwdriver (T 10 or 15 I think, can't remember which right off) to reach them. I found mine at Sears. Once the cover surrounding the steering column is off, just remove two screws and switch the units which costs about $47. at Groton if I recall.

Sounds like either your ignition switch is bad (somewhat common) as it will do strange things. Try wiggling the switch with your key while driving and see if it does anything. The other possiblity is that you have a PnP switch going south (more common). There is a good write-up for the R&R for this over on Bay13.
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1998 S70 T5 Emarald Green Metallic, 2004 V70 2.5T Ruby Red, Previous Owner of Black '94 850 Turbo Wagon. My cars have been running so well lately they've got me worried.