I found this thread in the UK:
http://www.volvoforums.org.uk/showthread.php?t=141000
While it does not resolve the issue, it will give you a few ideas as to what is going wrong. I am having the same problem with a 2001 Audi, the dealer has no clue and wants to throw a new cat on it. I think that there is a vacuum leak somewhere messing with the fuel mixture.
The rear O2 sensor was still good, it was reporting data just as it should. Perhaps a good 'hot' run after looking for leaks. Don't forget to look for a leak in the exhaust before the cat.
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My name is Klaus and I am a V♂lv♂holic
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