That's not good. It's probably a bushing or something. I'm currently going through an issue similar to this, here is my story:

While I was at college finishing up my freshman year my parents snagged a 1994 850 wagon to replace my 240 because I'm working halfway across the country in Michigan for GM (I'm from New Jersey). Well my Dad had the whole car checked out by a mechanic that we don't typically use because our usual one was booked solid, and I needed to be sure this one wasn't going to die halfway here. Well the car was fine on the way out, except for the blower motor dying, which I fixed this past weekend. I had noticed a loud clunking and squeaking on these horrible Michigan roads and decided to look into the issue. With my limited knowledge of car suspensions I popped the hood and pushed down on the passenger side, which is where I was hearing these noises. The car went down, but the strut didn't move with the car.

I took my car to the dealer knowing full well that I would be paying more than I wanted to get my struts replaced as well as possibly some motor mounts. I went to the dealer for several reasons, one being the recall service as well as the nationwide warranty. I'm only out here in Michigan until August and then I'm back in New Jersey and New York, so that nationwide warranty is important to me. Well the dealer called back and just about listed every suspension component that I knew of. The line I was fed is that several designs changed which caused the repair to cascade throughout the entire front suspension. Typically only a few parts need to be replaced, but since I guess the front suspension wasn't really taken care of on this car ( I couldn't find any records for the first 180000 miles that related to the suspension) the whole thing needed to go costing me $3100! I nearly fell out of my chair. The only problem with the situation is I'm stuck between a rock and a hard place meaning that now I'm stuck with the bill. I also can't delay the repairs because between July 2nd and July 17th I'm traveling more than 2000 miles.

In short: Be prepared to spend a lot unless there is a possibility of using after-market parts or the only parts that you need haven't been redesigned.