I've just been thru this with a 96 850. Couple of things to check. (1) your front (pre cat) O2 sensor may (probably is) failing. Volvo recommends changing them at 100000K anyway. (2) You may have a manifold vacuum leak that is "fooling" the front O2 sensor into thinking the mixture is too lean and it over corrects the mixture by enriching it. A major leak occurs at the rubber elbow under the theromostat housing. Bay 13 has good pics to walk you thru looking for common leak locations. (3) your ECT sensor (coolant sensor) may be failing that fools the control unit into thinking the engine is stone cold all the time. I'm ure these guys can think of other things. Good luck!

bl