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OK. First a link to the fault codes possible with the LH2.4 Jetronic.
Not all codes make the Check Engine light go on, but 2-1-2 on socket 2 does.
A faulty O2 sensor is not one to be ignored for long as it is important for the correct fuel mixture.
Now you must determine whether the O2 sensor is faulty or the wiring is.
Comprehensive and easy to understand trouble shooting procedures can be found in Volvo's TP31361/1 which is available here.
Last but not least this info is very useful too.
Good luck!
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