When the lights flash, it means the ECC found something wrong and has stored the code. Unfortunately, since 1996, you can not get the error codes unless you have a multi-thousand $ Volvo code reader.
The most common cause is a blocked cabin thermostat. It is behind the little grill thing in your row of switches, just to the left of the ECC. Once the ECC is out of the dash, you can reach behind the thermostat, pinch it at 9 and 12 o'clock and pull it out. Be careful and do not bend or touch the little metal piece that sticks out the front - very fragile. Then clean out the dust with a tooth pick and make sure the little fan turns easily.
The other reason for the blinking lights is a vent damper not working to spec. This happens to mine when it is cold and the damper hasn't been used for a while. I just turn the center dial to each position, slowly, until all of the dampers have moved. Then turn the car off and restart. Without a restart, the vents will not move and the ECC is esentially shut off.

The cabin filter is in the engine bay, under the tray below the windshield, passenger side. Remove the 3 torx screws and carefully pull up the plastic tray until you see the filter. Reach in and pull it out. FCPGroton has them for a reasonable price, the dealer wants about $20. http://volvospeed.com/pollenfliter.php

If the fan is not working at all, check this out:

http://volvospeed.com/Repair/pdash850.php

The ballast resistor controls the fan speed. The fan not moving at all is strange. Try turning the fan on to high speed and then reaching down below the cabin filter and giving the fan a push with your fingers to see if it is stuck. There are 2 fuses for the fan, check them both. The fan is fairly easy to replace. The ECC resistor is not cheap.
You can check fan operation by hot wiring it with wires from the battery, just to see if it runs.

Klaus
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The 164 has a new home, all I am left with are a 95 854T and a 98 V70R :)