A buddy of mine just picked up a '95 850 wagon, NA. The service light flashes all the time. I used the diagnostic port under the hood and went through the reset process a few times but the light just keeps flashing.

I have not read of any solutions short of replacing the cluster. On person claimed they found a loose vacuum under the intake manifold that cured the issue. A few people claim the problem appeared after a motor or head replacement. This car has had a head replacement. A '94 head and intake (VVI) was placed on this '95 car. The replacement head has the metal pipe that usually goes to the back of the motor on the '94 cars cut and crimped.

 

Does it have the Yazaki or VDO cluster?

The yazaki resets via button under the glass.
Volvo 850 how to reset service light reminder

 

Vdo...