My daughters 1989 Mazda 626 has (had) a similar problem 2 months ago, fluid leaking from a seal at the end of the steering rack. Seems the seals harden over the years but can be softened up by using a product called Lucas Power Steering Stop Leak. Checkout www.lucasoil.com so far it's done everything they claim, there might be the odd 1 or drips on the driveway but for a cost of 15 aussie dollars I can live with that instead of $1300 for a new one.
If you have to replace the rack enquire about a genuine Volvo factory reconditioned(recycled) unit. Two years ago for my 240GL they were only $A450 and came with new tie-rod end ball joints, this was less than half the cost the local power steering company could recondition mine for.
regards....Valvo
1997 850, 1983 240GL
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