I've started looking for a Volvo Wagon!
 

Question 1. Is there a huge difference between the 1985-1990 240 wagon models? I see the later models have a single headlight.

There were some changes to the fuel injection system during those years.

The wiring harness up to about 88 had issues with degrading.

240 differences
 

In outward appearances, the 86 models started with the "euro" style single modular headlight, along with different wheel cover treatments till 93, the last year of production. The venerable redblock engine received various upgrades, mainly for emissions. A driver side airbag was introduced around '91 and I think ABS could be found on '92 & '93 years.