JT, the lambda light (here in US it is called Check Engine) has been a very persistent problem for me during the two years of ownership. It has come on at 1500 miles for the first time and the dealer said there is nothing wrong, you didn't tighten the gas cap or fueled up with the engine running. I said I heard the salesman the first 10 times he warned me against this during the delivery talk and I was VERY careful NOT to fuel up with the engine running (this has been my practice for the past 20 years anyway). Dealer reset the light and sent me on my way. Not a month later the light came back on. Again, nothing wrong. This time I was given a gas cap from an 850 (slightly bulkier and with more threads) as a possible remedy. Nothing doing. Few weeks later the light came on. This time they (dealer) changed some parts (some valve or other). Some time later the light was back. This time they changed the charcoal canister. Some time later the light is back. I wrote quite a letter to the service manager summarizing all the occurrences and hinting at Lemon Law (a law here that allows the buyer to return the car for a full refund if the car is a lemon). The dealership I deal with is very good in customer relations, so the manager went out of his way to try and resolve this issue for me. You see, where I live the car will fail the emissions inspection if the light is on, so I can't even keep the car on the road legally with that stupid thing on. Yet the techs can't find a problem. They just change parts. Looking forward I do not want to be in the situation you are in paying for the (non) diagnostics and bogus (read: unnecessary) repairs. The dealer got Volvo of North America involved. The VCNA rep came down and ordered a new gas tank. The gastank came, but didn't solve the problem. They found an older style new gastank and that didn't solve the problem until they figured out that the new tank was missing some sort of restricter. They put this restricter in and the new tank seems to work now. Right now I am going on 72 hours and no light yet (keeping my fingers crossed). As a concession VCNA has paid for a VIP (extended warranty) plan for my car to cover it for 7 years/85K miles, performed a 20K mile service free of charge and detailed my car several times. The car has spent as much as 6 weeks in the shop at a time. I was always provided with a loaner of equal or higher level (usually the newest Volvo at the time - last time '01 V70 T2.4, other time, '99 S80 T6). So, I can’t complain about the dealer, but I believe Volvo has problems in the diagnostic part of the software for our cars. My theory is that the problem is in the software not your car. Basically you are getting a light because of a "glitch" that should be ignored.

Sorry for the long post, but I am pretty p-ed off because of this (non)problem. Otherwise the car is great. I love it. Mine is non-turbo 5-speed manual and it does ok on on-ramps.

Good luck and I hope some of this info is useful.