Following an incident where my 2.0L petrol 850 got flooded the Lambda light came on and stayed on (no change to fuel consumption) When the N registered car passed the MOT emissions test perfectly I asked the Volvo garage if they could re-set the computer which they duly did (without charge) light now off.
The Lambda sensor senses % Oxygen and plays a crucial part in determining the fuel/air ratio. It can be easily contaminated and so should be handled with care (RTM)
I doubt the trip meter problem is related but I could be wrong.
I donít know how the 940ís fuel management system works but I would check all the simple and obvious first; Plugs, leads, coil (good spark) Air filter (could affect mix if blocked) and only then swap the Lambda sensor for one that is known to work. Also ask Volvo if the FMS can be reset, in the 850ís case itís an OBDII plug in and a few key strokes on a laptop.
Hope this is of some use.