I have owned an 95 850 turbo. When I got the car I had to replace the cat when I did it the o2 sensor was trashed. Not wanting to spend $200 on a new OEM sensor, I spliced in a four generic sensor. My car ran OK but the check engine would always come on after 50 miles with the same code 131 and 137 o2 sensor. I just lived with the constant CEL.

The other day, I was at U Pull Auto Parts and happened on a fresh kill a 95, 850 turbo. The o2 sensor came out with a pliers how about that! I paid $5.00 for a used OEM sensor and transplanted it into car. Wow what a difference, besides no more CEL, I also noticed that my boost that was formally stuck at 4lb max now shoots up to ten!!!

I observed the old generic sensor with a scan tool and could see a distinct wave form between .2 and .8 so I know it was working but never completely jived with the Volvo's Computer.

I didn't think the o2 sensors input would have anything to do with boost but apparently it does.

 

Sounds like you were in limp mode.