I have talked to 2 Volvo repairmen, 1 dealer and 1 aftermarked. I have low cylinder pressure and a turbo that causes 200mi/qt oil usage. Both have told me that there is probably cylinder damage and my engine is toast. Any hope out there?

 

Is the vent system clogged?
It might be toast but I haven't seen any 850 with bad rings or cylinder walls unless it was overheated bad enough to melt a piston.
You might have a start of a burnt valve.

 

I'd have a leakdown test performed. My guess is its your cylinder head.

Whats the spread on compression for the cylinders?

Have the turbo rebuilt, all that oil its been burning may have gummed up your valves so they don't seal properly, but FIRST perform the leakdown test so you can see if your actually losing compression or if its just always low.