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Congratulations on your purchase, and welcome to the ranks of Volvo owners!
I think it doesn't sound too godd for your steering rack. No, there should not be any looseness such as you describe. As a minimum thar inner tie rod end will require replacement, but the fluid inside your boot suggests that there is more afoot than just the tie rod. I know of no place which will sell just a seal for the rack, and with good reason - there's no way to tell how long it's gone without a good seal, and the innards are quite possibly contaminated. The good news is that rebuilt racks are available for about $400 from sources like IPD and FCP Groton. Replacing one is a messy but pretty straightforward bolt-up operation.
You might also look into replacing the big bushings at the rear of the front A-arms. These are pretty tired out by 100k miles (YMMV), and contribute a LOT to ride quality. Sway bar bushings can also cause rattles and bangs when they are worn.
Hope this doesn't throw you for a loop... or turn you off to Volvos. Invest in a Haynes or Bentley manual, and do lots of research here on the BB. You'll become intimate with your car and that's a good thing.
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