This is really strange. I start engine, it starts no problem, the ABS light stays on and I cannot take it out of park. But I do, using the override button. Get out on the road and notice my directionals don't work, neither do my bright lights. If I put the light switch on parking lights only, they work, but when I switch to the brights no lights work. However the high beams work when I pull the directional stalk toward me. I turn off the engine and restart in a few minutes and everything is fine.
This is completely intermittent, happened a couple of times, but I cannot discern any pattern.
I hope I made some sense here and if any of you experts know what's going on here, please post.

Thanks, Peter

See if wiggling the ignition key affects symptoms. If yes, the electrical part of ignition switch is the culprit.

This probably isn't it but check your ABS fuse to make sure contacts are clean. That fuse also controls the headlight circuit on some 850's. You may want to email Victor the ABS guru for his opinion. If you have an ABS controller problem, he's the way to go.

http://home.earthlink.net/~vicrocha/Volvo_Parts/Volvo_V70_ABS.htm