I would suspect it is some wiring/electrical problem in the turn signal system itself inside the steering column. Since pulling the stalk turns the brights on and off, I would suspect that somehow this turn signal that is bad has something to do with your headlights too and is shorted inside. I hate to tell you, but unless you have an extremely competent independent mechanic who is well versed in that area of the electronics for a Volvo and is willing to open up the switch, I would take it to the dealer, unless you want to go buy the turn signal switch and have your indy install it to see if this fixes the problem (part numbers are listed below). If you're lucky, the dealer will test out the switch, finding the short and repair it, but most likely they will want to save time and make money too, so they will recommend the whole turn signal switch replacement. There are 2 part numbers listed for this: One with cruise control (#9162455) and one without (#9162454). Hope this helps...good luck!
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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.