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I'm a relative newbie to the Volvo scene but I'm pretty sure that being an '97 you're going to need two separate tools eventually. One is the code reader and the other is a "service" light reset.
Both tools plug into the data port which is just in front of your shifter, likely underneath the coin holder which pops off.
IPD (ipdusa.com) sells both at $175 each. Pre '96 850s didn't require either as the codes could be read and the service light reset from an under the hood diagnostic port. One of the reasons I bought a '95.
There is more information about codes at the following sites:
http://www.t5uk.com under "useful info and links"
http://au.geocities.com/ozbrick850/engine-etc.html
Hope it helps,
Erwin in Memphis
'95 855t (that my wife has today for the first time!)
A couple of Guzzis and a Montesa
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Regards, Erwin in Memphis, '95 855t
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