I gently sprayed some water in the engine compartment of my 1990 745 the other day to clear out some leaves and other debris. Shortly after the lights started pulsating at idle and a surge appeared when driving at steady speed. I suspected the alternator brushes or the voltage regulator. Upon inspection, the brushes were fine. I did notice that there was some corrosion on the little metal tab connector inside the hole that the brush assemble fits into (lean over with a flashlight and peer into the back of the alternator). A little bit of emery cloth and a touch of contact grease and Voila! Back in business. Afterwords, I found this note in the 700FAQ:

"Unexplained Driveability Problems: Bad Voltage Regulator. [Tip from Zach Gurley] Bad voltage regulator symptoms on a 740:
pulsating lights (not necessarily rpm-sensitive) the car lunges and jerks, especially when in gear and coasting (similar to the feeling of disengaging the clutch too quickly) intermittent engine spit and sputter at a specific rpm in any gear including neutral (mine was at 1900 rpms) It took me a while to figure this one out. Of course I figured the voltage regulator might need to be replaced because of the pulsing lights, but no one thought the problems were related to the violent sputtering I was getting. Apparently, the regulator was having difficulty coping with the additional power produced from a faster moving alternator, which was in turn messing up the ECU. The brushes were in good shape, but the regulator was an aftermarket brand, so it could be an isolated problem."

Sound advice but check the little connector at the bruhes before you pop for a new regulator.

Cheers,
Bill
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Volvo Info Site 1990 745GLE 16valve