There is a damper to the left of the glovebox that tends to fail, leaving the vent in the defrost position. This is not fun to fix as the location is terrible.
What happens is the hollow plastic shaft cracks, so the vent motor turns but the vent does not. The 'fix' is to remove the vent motor (3 #15 torx screws), glue and wire the the plastic back together, let the glue cure and put it all back together again. This is not a 'dealer' fix. Because your blinking lights of death do not come on, the vent motor is working correctly.

Beware, the vent motor is very close to the firewall and the 3rd screw that holds the motor on is hard to access and blind.

I currently have the vent blocked in the open position until the weather warms up and I can work on my 854 again. In my case, I have 2 blocked vents.

There are a couple of write ups with pics, one on Volvospeed and the other on Matthews volvo site. Your 1998 has the same system as the 850s, except that the glove box has to come out before you can drop the passenger side kick panel.

Read this entire post, quite long but educational:
http://www.matthewsvolvosite.com/forums/viewtopic.php?f=1&t=9982&start=14

You do not need or want to remove the entire dash! Placing the vent selector on defrost is a good idea before pulling off the motor.
While you don't have to remove the kick panel, I find it helpful when a screw falls down and lands on the floor board!
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My name is Klaus and I am a V♂lv♂holic