This is a known problem of 850s - there is a recall on this problem on some 850s. You may get lucky if you go to a Volvo dealer they will check if there is an open recall and, if so, do this for free.

My dealer said my 1994 850T was not covered by the recall (but this had been done for free as part of a recall for my 1996). They said that this problem is usually caused by a bad microswitch but not always. They found the microswitch to be faulty, and I ended paying $130 for them to replace it (and a bulb that went out at the shifter). Works great now.