I have an 854T5 and absolutely adore it!
I bought it used with 32,000 miles and have put 55,000 on it in 4 years.
Since buying it, warranty replacements have included shocks and struts, warped rotors, a wheel bearing, radiator replacement, turbo seals, climate control sensors (twice), foot well air vents (a very expensive job!), CV boots, and a buch of "minor" stuff.
My wife and I are currently looking to replace her Z3 with a low milage V70R, and when the T5 hits 100K miles it's gonna get replaced with a newer T5.

My advice - sell the old 850, get a 1999 or 2000 S70 with around 35,000 miles and negotiate hard for an 85,000 mile extended warranty.

This is purely based on my own experience with my 96 GLT, it was a money pit and kept costing and costing and costing. Everytime one thing was fixed another thing broke. I had every single known 850 problem happen with mine and it was by far the very worst car I ever owned. I would dump it unless you love the thing and don't mind spending spending spending.
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96 850 GLT 5-Speed- Sold due to astronomical repair costs.

As an addendum to my post, I just wanted to say that I've also owned Audis and VWs. Both cars have also had their share of problems, especially the Audi A4 after 50K (apparently if you buy an Audi in Germany, the warranty is something ridiculous, like 1 year after purchase).

If you want something that relatively maintenance free until 100K, buy a Subaru or if you have the $$$, a Lexus. I just can't stand the cheap, tinny plastic feeling of the lower end Japanese sedans and the boring handling of the more expensive vehicles.

You're probably looking into another $2000 or so in further repairs. Unless you're willing to foot the bill, it might be time to look into trading in the car. Unfortunately, Volvos aren't as overbuilt as they used to be. My 1986 245 GL didn't require much in terms of maintenance costs (~$200/yr) until it's tranny needed to be replaced at 180K.

I've actually owned 3 850s. I picked up the first one, a 1994 850T, used in 1998 with 100K. Until it was totaled in an accident at 150K this year, I think I spent about $2500 on the car for both maintenance and repair items. Problems that I had included both front and rear knock sensors (replaced twice under dealer warranty), the evap canister, A/C temperature sensor, both CV boots, both tie rod ends, passenger side front calipers, and a turbo oil return leak. My evaporator leaked (never fixed - I just recharged the system every 2 years), my roof trim pealed off, and my rear main seal also leaked (again, not fixed as it was also a slow leak - I used up one quart every 2K). The previous owner loved the car, but quickly sold it once his warranty ran out at 100K, given the fact that he had to replace the turbo at 5K, both oxygen sensors at 60K, and a fuel sensor at 90K.

Since the accident, I've actually since purchased two 1997 850s (an 855T5 and a 854T5) with under 60K each. I'm probably nuts, but I really like the car. The seats are incredibly comfortable and I like the way it looks and drives (my wife and me are suckers for the boxy look). It also allowed me to walk away from an accident that in most other cars, probably would have landed me in the local ER. It also helps that given my experience with the other car, I can probably diagnose and fix any future problems in the new vehicles, and thus I can avoid the local dealer.