I took some pics and posted some numbers here:

Oil
blow by

THAT looks nasty. Thanks for the link.

I know some folks say it's "normal"....but a) my 850 (nor any other car I own/have owned) does this - I live in a very wet place that has some "nice" tempurature excursions... b) That crap isn't good for the engine and does NOT lubricate.

As you (and I) posted earlier - suspect something like a thermostat opening prematurely/slightly sticking open. Not a huge dollar item, and NOT (as one guy said) throwing parts at the car. I don't suspect any major malfunction - but as cold as it is in some parts right now, if the stat goes closed - the engine should be warm enough to cook the water off.
--
http://www.fidalgo.net/~brook4/oilslubesfilters.html

http://www.brickboard.com/AWD/index.htm?id=589578

In the linked thread, what I was talking about is far different from the pics shown here showing a "milkshake" effect. That's a whole different situation than what most people here are always bringing up about the "mayo" type stuff they're seeing on their dipsticks (sometimes oil fill caps too).

The oil that looks like a milkshake when drained (doing an oil change) indicates a severe problem where coolant is mixing with oil, a very serious situation in comparison. In my many years as a Volvo tech, the only times I've seen that was after an engine was severely overheated and the cyl head warped badly. It's far from common or normal. A bad t-stat doesn't do that either.

Now.....back in the old days when I was a Datsun tech, I'd see that fairly often as old Datsuns ate head gaskets, often every 40K miles in their pushrod type engines (F10s, 310s, 210s).

That’s not oil drained. That’s blow by. I have an open emissions system on that car and crank case gas is collected and condensed. In the second sample the blow by was almost entirely fuel and oil. The first was over half water. The mayo on the dipstick is the same stuff as in the cup. Its just the cup is 500 miles worth not just a random sample.

Strange, can you explain how exactly you got that? Explain "open emissions system". Do you mean "swarth" ....a british car term to explain the nasty substance swabbed from inside air hoses, etc?
If so, that's not always a bad thing on engines used for short trips during cold winter weather and yes, especially if the t-stat's defective (engine not reaching proper operating temps). Sure, I wouldn't like seeing that stuff in my cars engine parts either but it's not a major deal if the oil drained during an oil change still looks normal IMHO. If the drain oil looks like that, it's serious.

Open emissions, I do not rely on a PVC/crankcase ventilation recirculation system. Instead I use a catch can and breather. This allows me to monitor blow by volume, content, as well as seal condition. If you have other questions feel free to ask.

I then assume (hope) that's only on your car? Technically you can't or shouldn't do that to customers cars driven on public roads as that'd be considered an emisions violation, making a crankcase breathing system like a '62 car (pre-PCV).
I'd only do something like that on a high perf race engine (used for racing only) as IMO, a good working PCV system is preferable.
I've owned pre-'63 cars before and honestly, I'd prefer a good working PCV system anyday as breathing vented crankcase gasses on decel is never a good thing unless you're venting it back. Todays engines do better with PCV IMO.

Pre 74 cars used no PVC correct, but they also used draft tubes that alowed blow by to be sprayed all over the road. Again I use a catch can and condense 95% of it. As for the car it is a project car, so exceptions have to be made, like PVC, cats, mufflers, and many other things. The car has a full interior though and runs great with no CEL. The Car In Question

Nice car but PCV really was a good idea, not something negative like EGR, secondary air pumps, etc.
I too have a modified street rod (non-Volvo, 500HP V8 powered beast) but it maintains a functional PCV system (its ONLY emisions device btw, no cats, no O2s, no EGR, etc) and no, it doesn't go through our states strict emisions tests either as it'd never pass but THAT's another story and I won't say how online anywhere.
In the US, ALL cars had EGR by law since '63 (even US market Volvos to my re-collection).

Agreed. I used to live in Alaska and Volvos do not do it up there. Depending on how much "foam" you have, it may cook off with a long hard drive. If you have a lot, change your oil and thermostat. Just thought I would let pictures and numbers speak for themselves as I have 100s of pages of data and oil assays on Volvo Inline 5 engines.