This is less likely than the possibilities already mentioned, but I would also check your steering shaft lower u-joint and the rack itself for excessive play. Either one can cause the steering to float as you describe. When the lower u-joint went bad on my 240 the steering was all over the place. Definitely not safe!!
Usually what happens to Volvos is the steering shaft lower u-joint binds up and makes the steering overly stiff and it does not return to center very well. Probably not an issue for you since you are in NM. The steering shaft u-joint can bind up here in the NE due to all the road salt, sand and other crap that is used on our roads in the winter. FWIW - I have had issues with the steering shaft lower u-joint on both my 240 and 850.
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