I suggest fixing it. The engines and transmissions in the 850/S70/V70's will normally go well over 200k with care. As they are the really expensive items to fix, almost anything else is just maintenance to keep it running and safe.

The check engine light could be something as simple as the gas cap not being screwed on correctly. Find out what it is before making a decision.

The car is certainly worth a lot more than $150-200. Even at the junkyard! Factoring in needed work, I'd guess it's value is still at least $1500 if the body and interior are good.