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Your catalytic converter has failed. That's the only thing responsible for high NOx- and yours is pretty high.
If it was a bit lower, I'd suggest setting the timing to 0° advance. This is still worth trying, though the car will be down on power significantly. (Um, don't mention that to the emissions test guys).
New catalytics can be had for $120 from FCP Groton and other suppliers- Volvo list is like $900 so forget them. The bolts are likely to be a royal pain but any exhaust shop should have no trouble replacing it. Use a proper direct-fit catalytic converter- the "universal" converters sold by Midas and other places require hacking up the exhaust system. Get the right one even if it's $50 more.
Good luck.
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Rob Bareiss, New London CT ::: '87 244DL/M47- 221K, 88 744GLE- 202K, 91 244 181K, 88 244GL 145K
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