Ok - an update on my situation:

1. I talked to a parts guy at the Volvo dealership (both of them in my area are pretty nice - Nashville and Franklin, the one I was at) and when I described what was happening to my car (the choking, uneven boat engine sound of the engine, the shimmying, and the gas mileage, and the smell) he said that his wife's volvo's ECT fuel sensor (something that sounded like this) had gone out and that was kinda what her car was doing until they replaced it... he said that a catalytic converter is sort of unlikely, even with the mileage (they do go out, but it's not common.)

2. When we were changing out the spark plugs, my dad said the old ones looked like the engine was getting too much fuel. (That ECT part is only about $60 - a far cry from a catalytic converter...)

3. Weird because now there is smoke coming out of the exhaust... more of a sooty, but grayish black and THIN smoke, same smell...

3. BUT First we're going to change out the air pump and the SAS valve (what the check engine code said was wrong), which could also be causing this? The previous owners had gotten the diagnostic and declined the repair (I have the dealership records), hence the good price on the car for do-it-yourselfers... I am probably going to go to Autozone tonight for another diagnostic to see if anything else has popped up in the meantime. (I will post them here) Thanks so much!!!! That is amazing. I never knew about that and I was thinking about going to the dealer for this! JRL & MadeInJapan - you're awesome!! Thanks for the info!

4. The parts guy said to clean the throttle body as well - I was going to anyway, but quick question: what does this part do? Just curious and I don't want to wait 'til my dad gets off of work to find out.

That's about where I stand. If anyone knows where I can find a really good air pump for a really good price, please let me know. I will try the fcp site - I heard someone found one somewhere for about $300... Also, I've heard rumors that the S70 and 850 air pumps are the same pump (part #, too) but are priced differently depending on the model of volvo that you ask about. Any info/advice? I'd like to go ahead and get these parts so this can be fixed by the weekend (sooner, if I can get the parts here), so I can see if it works - kinda scared to drive the car around like this but I don't have another ride! Arg. I just don't want to screw anything else up by not getting to the root fast enough.

Oh, and I finally scheduled a transmission fluid change at a local Mr. Transmission - (did you know that they don't do flushes because they think it tears stuff up? How cool - they do it the old-fashioned way... heard good things about them, too... I hope they will do a good job! -comments on experiences will be greatly appreciated!!)

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and after a few replies from helpful people: (why I LOVE LOVE LOVE forums)

OMG!!!!!! "9179271 Air Pump fits all models $295.00 Genuine Volvo or Pierburg" from fcp.

I love you people!!! (I thought $380 at least with my luck!!!) I will be able to eat this week.