Are you in the U.K.? No such thing as a '96 V70 over here in the States, but we do have 850's in that year. '96 850's through '98 S/V70's do take the special tool you mentioned to reset the light. I've searched long and hard and found no other alternative. Funny thing is that the light reset tool is something made in the U.K. by a company called Draker and you can find these on eBay for about $70 U.S., and this includes shipping (where I bought mine). Elsewhere, they are ridiculously expensive. If you are in the U.K., you might search for that tool over there as it should be cheaper. Unfortunately, unless you buy the Volvo Scan Tool (found one on eBay for over $1200 yesterday...wow, too expensive), there is no scan tool or OBD-II instrument that will reset the service light.
Good luck.
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1998 S70 T5 Emarald Green Metallic, 2004 V70 2.5T Ruby Red, Previous Owner of Black '94 850 Turbo Wagon