Your problem in my opinion (based on the same experience with my '96 850) is almost certainly a slipping compressor clutch.

To answer your questions, you access the climate control sensors behind the door handles above the doors on the inside. Carefully pull out or wedge out the covers, then blow air into there. Use a flashlight and make sure the little fans are spinning. This probably isn't your problem, but they should be cleaned anyway.

You can easily bypass the temp sensor on your compressor, but again, this probably isn't your problem either. There is a diagram somewhere else on Brickboard showing you how to do this. I disabled the sensor on my old one, but the same problem persisted.

The A/C Clutch is on the left side of your compressor. Looking down at your engine, find the serpentine belt, you'll find the compressor at the bottom. The clutch is between what the belt connects to and the compressor itself. There are directions on Brickboard how to adjust the clutch yourself, although it doesn't look easy. I figured it was time to replace the compressor. Good luck!