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Ignition Problems? - Headlights ABS Tracking 850

95 Volvo 850 Turbo 2.3

I've replaced the engine and now working on bugs. I just purchased this car so many of the bugs are from the past. I'm not sure if this is supposed to work this way or not so I'm asking.

With the car key on (before crank) the headlights come on

After I start it, the headlights lights go out.
ABS lights are on and the service lights are on (stays on for a minute and then goes out but ABS lights stays on).

When I back the key up or rotate it counterclockwise a hair the headlights come on and the Trac light comes on stays on for 3 or 4 seconds and goes out and aslo the ABS lights goes out.

Any ideas? Are the headlights supposed to stay on or off?
Could the ignition module or switch be going bad and if so, anyone have replacement procedures?

Thanks






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