I've probably done more miles in 850s than any other car as a driver/passenger. My dad had an N/A auto 94(?) wagon for a long while, my first car was a 94 N/A 5 speed, and I later owned a 96 turbo that I got for free. Both of mine were sedans (unfortunately.)
My 94 was bone stock because I was 17 and poor and ultimately got killed driving it into a curb in a snowstorm doing dumb E36 M3. The 96 turbo had a manual boost controller with the boost cranked as high as it would go before hitting fuel cut on the stock tune and Koni shocks on the rear because I got them for cheap (actually still have them if anyone is interested.) The MBC (built with Home Depot parts) made a very noticeable difference in power and throttle response. I dumped it at something like 190k miles because it failed inspection for a million nickel and dime things, most notable the "delta link" bushings in the rear suspension.
These cars had a weird rear suspension design that allowed some passive rear steering known as Delta Link. Basically the control arms link to eacch other and transfer lateral force in cornering to a compressible bushing on the opposite side that allows the passive rear steering. The back end started getting all loose feeling when these bushings rotted out and they're apparently a royal PITA to DIY without the factory tool, which is evidently made of unicorn piss and fairy farts.
Its been probably 5 years since I had my last one, so it may be stretching the memory a bit, but I think cranking the boost and adding a free flowing exhaust is supposed to net around 250hp at the crank on stock tune. With a tune, I think you're good to like 270-280ish on the stock turbo, which is a Mitsu TD04 15g. The popular bolt on upgrade turbos are the 18t and 19t Mitsubishis, forget which Volvos those came from. The limit on those is something like 320+ hp I think. Later white blocks switched to Borg Warner turbos IIRC, K04s maybe??
Forget where the stock injectors top out at, but once you get to this level of power the auto trans starts to become suspect. The rods are what limits the block itself in terms of power, IIRC somewhere around the 400 range is where they can become a problem. Depends on how rapidly the turbo builds boost though, big spikes at low rpm are supposedly what to watch for if rods are a concern.
The M56 isn't the slickest shifting tranny, from what I recall, but it sure beats an auto. I SO wish I would have had both of my 850s at the same time, as a manual swapped turbo might have stayed around much longer. Never driven one, but I sure have dreamt about it. FYI, I believe in Canada you could get a turbo manual from the factory.
IPD is your friend for suspension mods, they've got springs, sways, and anything else you could want within reason. As mentioned above, Koni makes shocks for them as does Bilstein. Stock I wouldn't call the ride sporty, but its definitely a bit more taught than, say, a W210 Merc.
They're super comfy and great long distance cruisers. AWESOME seats. Lots of interior room, I'm 6'3 and could comfortably sit behind myself. I once fit two partially disassembled dirt bikes in the '96 sedan. The body shells are fully galvanized and do not rust. The 96 had aboyut a quarter size chip in the paint on one of the quarter panels that refused to rust through 2 or 3 upstate NY winters worth of road salt.
I'd totally rock another one if I were looking for a comfy 4/5 door DD, although it might have to be a manual swapped turbo this time around.