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Hey...
My '95 850T just had a cat. replaced for $550. Was completed by my (volvo) mechanic in Marin Co., CA and was OBDII compliant. The local dealer quoted me $1,200!
I was getting the same error code for low cat. efficiency. My oldest O2 sensor was only 3 years old. The mechanic used an infrared gun to measure the temp of both sensors and the cat. The cat. was colder than the O2 sensors. It's supposed to be the opposite.
My car has 171,000 miles, so your's is probably ready to be replaced.
dpsc
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