1995 960 B6304"S"
Well ... got the problem finally "nailed"! Thanks to Regis Easler & Jeff Reid (allexperts.com), as well as many of you here. Some of you were trying to tell me that the engine had TWO coolant temp. sensors and I would not listen.
My wiring diagrams did not have it and I could not find it, so it just did not exist. The only reference to it, that I found later, was in the torque specs of the Volvo Pocket Data Booklet, page 48. Mr. Reid just flat-out said, "replace the REAR coolant temp sensor" period! He told me where it was and what it looked like (that is what a hard-head like me needs).
From a B6304 '95 960 Motronic 1.8, this coolant temperature sensor is Volvo#68 49 350 (SWF#602.101) and apparently plays a roll in fuel injection and various timing functions. The symptoms, in my case, were sudden very high idle surges (2500-3000 RPMs) while sitting at idle and hot-start problems. Testing the sensor in heated water, indicated normal operating ranges until reaching 180deg.(220 ohms) .....that is where the circuit would open completely (infinite ohms). I cut the sensor open and found that one of the legs of the thermistor was not fully connected to the plug connector pin. Also, the wire legs on the thermistor were so fine I had to use a magnifying glass just to inspect them. Apparently when the brass housing would heat up it would pull the connector pin away from the thermistor leg. It is similar to the front one (FRONT Volvo#35 45 031), but without the 5-inch connector wire.
This sensor (REAR Volvo#68 49 350) is at the rear of the head and requires a mirror taped to the firewall and a 19mm "open-end" wrench for removal (drain the antifreeze first). It has a 2-pin D-type connector mounted right on the brass housing. The large size of the connector keeps you from being able to get a good "box-end" wrench on it, but mine was not very tight anyhow (just very hard to get to). I have further learned that these symptoms can also point to the wiring to this sensor, because of the location between the fire-wall and hot engine parts. I could suggest to anyone with this engine to keep a new sensor handy, because it looks like the car will be dead-in-the-water when it fails.
I was so excited to have found the problem, I immediately got my wife to look under the hood so I could show her where the problem was. I leaned over with my hand on the radiator and the plastic water inlet connector snapped off clean and left the hose dangling with dripping antifreeze. Now $300 to replace the radiator with another "high-quality" Volvo plastic piece-o-crap......but coming out of the sensor problem, this is easy! Thanks everyone for the help on this! Tom Haywood