The brakes work as normal - you just don't have TRACS/ABS. The NHSTA and the Insurance Institute do NOT consider ABS to be a safety consideration; their statistics show that ABS play no measurable role in reducing accidents, probably because people don't know how to use them.

It's more than likely the problem is the controller (a huge problem in 1996 and 1998 model year Volvos). I'd get it checked out by someone who can read the codes - there isn't a code for 'bad controller,' but there are code clusters that will clearly indicate such a problem to a knowledgeable tech.

Finally, someone going by the name of 'Vitor' on this forum repairs Volvo ABS unites; here's a link to Vitor's website.
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David
1998 S70 T5SE // misc mods (mostly lighting) // red calipers // Michelin Pilots
1992 940 GLE//SilverStars//Hella MicroDE