Mikael,

As you pointed out you don't have a 2.4 LH-Jetronic system like I do, so maybe my information is not completely accurate for your vehicle. However, the O2 sensor you have is most likely the same as the one I have, and should work the same way.

This is how the 2.4 LH works; hopefully someone with an '88 700 can point out any differences!

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I read the Volvo Fuel Management 2.4 manual 1989-1993 240 (TP32394/1) again last night, to make sure I understood it completely. In section EB, it explains how to test the O2 sensor. Part of the test is to disconnect the single black wire at the firewall, and, with the ignition on, measure the voltage on the green wire; it should read 0.5V (the 'reference'). The voltage on the green wire - when it is not connected to the black wire - is coming from the computer, not the O2 sensor.

If you only get 0.064V, it sounds to me like the inner wire is still shorted to the shield. Turn off the ignition, disconnect the computer, and measure the resistance of the green wire to the chassis ground. There should be very high (infinite) ohms resistance. If not, you have a short.

When everything is connected and the engine is running, the voltage at the single black should swing from 0.1 to 0.9 volts. On a digital meter this may not always be easy to see, unless you have a meter that also has a bar-graph display (like some Flukes and others), but even those don't respond fast enough. With just the digital number display you should get wildly changing readings, depending on when the ADC sampled the voltage. It is not easy to see on an analog meter, either, since the meter will mechanically average the signal. In any case, you should see the voltage fluctuate when the engine is running; it should not stay at a steady value.

Here's a quick way to bench test your Halmeter: Take a 1000 ohm resistor and connect one end of it to the end of a diode (example, IN4001) opposite from the stripe. (If you don't have a resistor, a small 12V lamp - like one for the license plates or interior - will do.) Connect the other end of the resistor to +12V, and the striped end of the diode to ground. The voltage at the point where the resistor and diode connect should be around 0.6 to 0.7 volts. Measure it your meter to confirm this before continuing.

Now take the Halmeter wire that would normally go to the O2 sensor and connect it to your diode voltage reference. If the Halmeter is working the way I think it should, the Halmeter should be reading slightly RICH (<0.5 = lean, >0.5 = rich).