OBD 1 is a name given to the first level of required (clean air act of 19XX) self-diagnostics that specifies that things that make emissions exceed the std be reported to driver in the form of a check engine light (other texts are allowed other than 'check engine' but that is the one Volvo uses). OBD-1 also requires that a diagnostic trouble code (DTC) be stored that can be retrieved by a service person. The other things required are some simple test features to acknowledge inputs from some of the sensors and an activation test that operates the items that the engine management operates (injectors, idle control valve, egr valve regulator).

Volvo non-turbo 4 cyl had this '89 on, turbo 4 cyl '90 on.

OBD-2 is a more comprehensive requirement that requires any emissions critical part or function that the manufacturer can't assure will have ABSOLUTELY NO FAILURES to be tested.

OBD-2 has different levels and not all cars have as extensive an array of features.

ALL OBD-2 have misfire detection, catalytic converter monitoring, storage of certain sensor values and operating conditions at fault occurrence, and the capability to have the ifo retrieved by a generic scanner tool through a common digital language.

Further testing that is phased in and is on 100% as of 98 yr model (it might be 99 in some cases if the manufacturer earned credits that allowed it to delay [planting trees, dragging beached whales back to sea...... just kidding!!]) is the fuel tank vapor leakage test than many out there are very familiar with.

Your 96 850R has motronic 4.3 and it is OBD-2 but without tank leakage feature (you ain't missin' nuttin').

The downside of OBD-2 is that compliance with all the display items using the std language pushed out the feature previously used where you could get DTC's via an underhood simple numeric retrieval function.