I get it! There are 2 rear camshaft seals. One behind the cam position sensor and the other under? the distributor.
I replaced the CPS on my 95 850. Saw the camshaft seal behind it but didn't replace it as it wasn't leaking.
Here is my theory: Your rear camshaft seal (exhaust) located behind CPS is leaking on your CPS sensor. So, when the engine is cold there is very little leakage and your engine runs fine. When the engine warms up the seal leaks more and must be affecting the CPS sensor.
Easy job to replace one or both of them - pull off the CPS to check for a leak and you'll see what I mean.
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Will I buy another Volvo??? We'll see....
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