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You should have a diagnostic unit (ECU) with a jump plug and LED (light emitting diode) on it; located under the hood on drives side back corner (near fire wall toward the fender). It has a pull off cover to protect the socket connections.
You may have to check the FAQ section or www.ecutecparts.com/ccodes/volvo.html, but I think you plug the jumper (part of the unit) into socket #5, turn on the ignition key (car not running) and press the button (on the top left end of the unit) twice; (each time no longer than 3 seconds, but no less than 1. You should then get 3 sets of LED pulses representing a 3 digit code. I think 1-1-1 is no fault.
Second, I have had the same problem on my 1991 940 turbo from a variety of problems. Kevin has hit most of them on his post. Don't rule out distributor cap/rotor, plugs and plug wires; especially if the problem is worse when damp outside. Although I have hard of similar problems cause by power stage (on inner fender wall by battery), I have not had a problem with mine at 201,000 miles. My last problem was the radio suppression relay (drivers side relay at strut tower) which can be swapped with the electric cooling fan relay (same relay) for testing. You could also try to remove cover and resolder, but price of a new one is only $25.
Gary
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