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I've largely disassembled my 1986 740 GLE (a clone of Volve's car) and I only found crumbly wiring at the exposed end of the harnesses. Any part of any harness that was sheilded from the heat by the volvo black tubing is perfect.
However, the plugs towards the front end if the car are rather brittle and the exposed wires broke down here as well. I pulled the front light arrays from my car and the headlight plugs were fine, but the exposed forward end of the wiring harness was in bad shape. I'd bet relay. If not, check for a short/exposed wires in the front of the lighting wiring harness.
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