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It is not normal.
The hole is there to bleed out oil that accumulates (some oil is
drawn past the turbo's seals and accumulates in the intercooler).
Why do you think it is freezing? I've heard of people saying they
had enough water in it that the intercooler completly froze up
and the car would not start. The intake tube to the throttle would
even be collapsed from the vacuum. You might search the archives for
their posts.
By any chance do you have the older "revere" flow intercooler
setup. Early 850 turbos had the turbo feed the top of the
intercooler and the throttle drew air from the bottom outlet.
Look at it and this makes sense as the best setup. But, it led
to some freezing problems and Volvo re-designed it so the turbo
feeds the lower end of the intercooler and the throttle draws air
from the top. I think they recalled the early ones to re-plumb them.
By the way, some people put back the orignal setup since it has less
plumbing and, in theory, that helps throttle response when the turbo
does not have to boost all of that volume. Here's a guy who has custom
built some plumbing to do this:
http://www.cardomain.com/memberpage/325618
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