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Welcome to my life.....
I am having the SAME problem on my 96 850 and my 98 S70. It all points to the ABS/Tracs module that has a high failiure rate.
We should report this to the NHTSA. Maybe they will force Volvo to have a recall!!! But in the mean time the solution for this problem is the replacement unit for a ABS Tracs module which sucks when you have 2 volvos (like mine) who need to have them replaced.
I did speak to an independant Volvo repair shop and their suggestion on my 850 was a faulty ABS sensors which can trigger the light. However to clean them and replace them is $300 (according to this mechanic)
I dont think there is a cheap solution for this problem. You can save money on purchasing the module online and installing it yourself.....
I plan on milking this problem on mine, not a very wise thing to do but when you dont have the cash for such a repair.... you ride it out.....
PS: FIAT made all the electrical components and modules for Volvo..... found this fact right here on brickboard.....
Ali
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