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This is a common problem with 850 wagons. Volvo has issued a TECH-DCS (No. 85-07, dated 10/2/96 on it. It is caused by the latex backing on the carpets glued to the wooden floor lids. The TECH-DCS claims that it only affects 97 model year, with chasis numbers 0275000-0310173, but my 96 has the same problem.
If you can convince the service manager that it really does smell, then Volvo will replace the floor lids. There is a kit for such replacement. My service manager just said, "all Volvos smell like that," and wouldnt do the replacement.
Good luck getting your service manager to take you seriously. Mine wouldnt.
BTW, it also affected 97 960 wagons.
Rich R
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