I had a similar problem with our 95 960 and it was the A/C compressor overtemp safety sensor. It was a common problem and is easy to bypass. It seems the setting on these was too low and Volvo recommends the bypass.

That being said, on our 98 S90 the A/C would blow icicles out of the vents the first time the A/C was turned on for as long as the A/C would run no matter what the outside temps. Once the car was shut off, the A/C would not blow cold air again on hot restarts for the rest of the day regardless of outside temps. The next day it would blow icicles again on the first A/C use. This was corrected by adding a small amount of R134a to the system. It appears it was low. I would have never guessed that a low charge would cause such a strange HVAC system behaviour.

DEWFPO
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1998 S90 083,228 and 1995 964 154,100