Wow -- that's a strange one.

No, I haven't heard of this before. Regardless, I have two thoughts about a solution:

1) Press the dealer to fix this under the emissions equipment warranty. I believe that extends much farther than the vehicle warranty, but it might not cover this type of failure. Look it up in your warranty documentation.

2) A new O2 sensor mount should be able to be welded onto the existing manifold VERY cheaply. Any muffler shop should be able to do it, but many (most?) are more concerned with making money by selling you expensive parts than they are with giving you the cheapest reliable solution. Granted, I haven't seen your manifold, but I can't imagine that you'll need a new one.

Good luck. Let us know how it turns out.


--
Jim Rothe, '99 S70 T5M,
http://www.jimrothe.com/volvo/index.html