I had the same thing happen to my 96 850, at about 120K, about a year and a half ago. I opted to replace the rest of the exhaust system as well as the catalyst at that time, but I'm not sure I would do that again. Welding it might be the better option. My thinking was that I only wanted to deal with the exhaust system once and I doubted that I could get the pieces apart without damaging the joints, especially the flex joint upstream of the catalyst. This didn't turn out as well as I had hoped.

I ran into problems with the replacement parts or installation. The aftermarket muffler unit (Bosal, I think) is very noisy compared to the stock unit; I am thinking about replacing it just due to that. I'd definitely go with the Volvo part instead. Then, this winter I got a MIL and trouble code for the catalyst (efficiency below threshold or something similar). I am still trying to diagnose the source of the DTC; it may not be the aftermarket catalyst, but it may be. (That is still under warranty luckily.) And my final problem was that I broke an exhaust manifold stud installing a new manifold (which wasn't the fault of the parts, of course). By the time I paid for all the parts and a garage bill to get the broken stud out plus towing, the total was over $1000.

Hopefully, you may be able to fix your problem by welding. If not, be careful in buying your parts and good luck.

Gregg Downing
96 850 GLT wagon, NA, manual