850s are not as good as 240s, 740s or 940s, but my guess is that you didn't get a pre-purchase inspection from a mechanic. Some or most of the problems you encountered might have been picked up on by someone who knew what to look for BEFORE you bought the car.
Obviously you purchased the car quite some time ago, however if you have receipts, and your state has a lemon law, then you are in luck. When someone says, "You purchased a 14 year old car, there are bound to be problems", then that is just wrong. The problems must be revealed to you before purchase, and the price must reflect the issues. If you have a lemon law, then you are golden, If not, I would go with small claims court, and get some of the money for the repair bills back. Also, if the speed went junk, because it was tampered with, then you will have that as evidence. You will need an impartial mechanic to verify your claims, though.
Surely a oil leak from the valve cover gasket isn't going to cause the engine to stop, nor should a exhaust manifold gasket leak going to stop the engine either.
When I bought my 850 from a dealer for $2000 aussie dollars, I didn't expect the car to be faultless, if it doesn't break down over the next couple of years I will be very happy.
If you want a faultless car, you should buy a new car.
I also believe that you are taking a huge risk when buying a 13 year old vehicle with over 100,000 miles on it.
I don't think you can call such an old car a "lemon".
I have a '94 850 GLT Volvo, bought it 2004 and it's still on the road. I never had any trouble with something, it's like the car never stops. I even crashed into another car once, and I had almost no damage. Of course the other car was like totally screwed up...
But I love Volvo, it's a dream of a car, too bad they don't make cars like that any more..
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