That was a somewhat common and troublesome problem with '94 turbos (the first year of the 850 turbo in the US). The code that sets is always intermittant and the diagnostics for it aren't very good IMHO (being intermittant, not duplicateable). You end up having 3 "best guesses" by process of elimination.

The car has 2 knock sensors under the intake manifold and the original wires were thought to have intermittant connector problems SO Volvo made a replacement part where both knock sensors are then replaced with one part hardwired to the harness instead (eliminating 2 connections at each sensor). Often but not always does replacing the knock sensors with the newer type solve the problem, but it's usually where most people (techs) start. Unfortunately I've seen at least 2 cars where that didn't fix the problem which leaves 2 more possibilties: 1) control unit (fuel ECU) or 2)the wiring between the ECU and knock sensors. The cars I've seen where someone started with new knock sensors were fixed by then replacing the ECUs (not cheap) and never have I seen where it was a wiring harness problem.