The exhaust leak was at the header/downpipe connection. The sealing surfaces were a bit distorted. I used 2 gaskets. I put copper high temp gasket maker between the 2 and then a liberal bead on all sealing surfaces. NO leaking at this time.

This, however, did not solve the high nox problem. The solution to the high nox was a new catalytic convertor. Now, 0 nox.
Cost me 610.00 dollars. Diagostic(179)+cat(297)+test(54+ 8.95)+labor(and one hose that was split-10.00). They made their money on the cat, a pitiful looking generic. Probably cost them 150.00(maybe less), but cost me 297. Carries a 4 year warranty.
(compared to the original volvo wearing 23 years),
I would've come out better, dollar wise, if I'd just installed the cat and retested. Who knew? Hey, its just green paper. Or in this case numbers on a key pad.

Thanks, as always, to the brickboard. MY brick owes its life to the brickboard.

Original post here:

http://www.brickboard.com/RWD/volvo/1541140/740/760/780/failed_calif_emissions_high_nox_need_little_help.html