I would keep the 850. 160,000 is low, mine is at 188,905, and it is a champ. Kepp the old Volvo and put some bumperstickers on it. Be original.

Try adding some new pwr steering fluid. Just drain the resevoir w/ a turkey baster and refill with fresh fluid once every few days for a couple of weeks. Most fluids have some sort of leak preventer or seal conditioner. You may no need a new rack.

i own "your" car. i just bought a 1995 non turbo wagon with 160k and an auto tranny last winter. i am spending a little time turning wrenches and getting the other parts swapped/fixed as they go. it's a good car for me, a daily driver that gets 30MPG on the highways. look for another independant shop, i call "shenanigans" on the claim of "we dont know until we take it apart" any shop can provide you with an estimate and call you for the problems that can "hide" until the car is apart.

also, i am seeing some late 90's V70's around my area going for less than $10k

i say keep her alive.

good luck!
--
-woodsytf '95 850 wagon 160k

You will pack the car in when you are tired of it. ONLY 160K miles? If you sell it, expect to get around 2K as is. An 04-05 is around $10-12K depending on miles.
Is your steering rack really in need to be replaced? Most times, the seals get replaced depending on the leaks. Control arms get weak, etc.
Is the manifold cracked??? That is not usual at all. Junk yards are full of them at a reduced cost. In fact, all of your needed parts can come from salvage yards, lowering the cost to maintain.
But a new car won't need parts for a few years.

Klaus
--
I still miss my 164

Since you've had the car all of its life I would hang on to it. Is the steering rack leaking? Check FCP Groton for a price on it. I don't recall them costing that much. I've heard of the exhaust manifolds cracking, but yours should be fairly easy to change since it isn't a turbo. If you've taken care of the car then I would see no reason to get rid of it. I've seen 850's with 300 K + miles and they still run fine.