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I'm not sure how similar the 1986 700 is to the later 940s, but what got rid of a really annoying steering rattle for me was greasing the top bearing in the steering column - directly under the steering wheel. By the time I got around to this fix I'd largely renewed my front suspension in search of the rattle, but as I plan to keep the car for 5 more years it was work I had to do at some stage anyway...
To grease this bearing it was necessary to remove the steering wheel, and then the circlip and plastic spacer piece. I just poked the grease into the bearing with my finger, but a grease gun with a needle point attachment would have been useful to really get the grease down into the bearing.
I assume you won't have an airbag on a 1986 car(?) but if you do, be sure to follow the instructions in the Brickboard FAQ section (disconnect battery, lock the contact reel in place etc)
Good luck
John Marshall
1994 940GL
Christchurch NZ
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