Summary:
This is a compilation of the steps that I took to install side marker lights (sml) on my 1995 850. My car was not prewired, which is a major complication compared with prewired models.

• remove the plastic cover on the side of the car with Volvo written on it;
• remove the gray cover that gives access to the area underneath the steering wheel;
• remove two bolts (10 mm) that hold hood release handle to the side panel;
• locate a rubber grommet (in the direction of the door) looking through the opening in the fender;
• locate a rubber grommet on the inside of the car in the vicinity of where you removed the hood release handle, remove this grommet;
• observe that these grommets are not in-line;
• take a long (10") Sears screwdriver and punch a hole in the outer grommet
• connect both wires to the connector and to the lamp;
• feed the first wire through the outer grommet in the direction of the inner grommet (which was removed), until you can see the wire through the hole on the inside (this sounds easy but is by far the most time consuming part of the hole job);
• grab the wire and pull it through;
• repeat the procedure with the second wire;
• insert the sml in the opening in the fender;
• repeat the relevant above steps for the other side of the car (do not try to remove the hood release handle..);
• find a wire tester (a small lamp that will light if a circuit between positive and negative is completed) and verify that it works;
• feed the wires through the grommets which were removed earlier;
• crawl in to a position underneath the steering wheel so that you can look up (this is not supposed to be comfortable);
• locate branching point 23/207 and 23/208 in the red junction box, by looking for a solid green wire and a blue-green wire (these should be right next to each other), you can also find the junction box by following the cable tree that comes from the steering wheel;
• switch on the hazard lights and verify with your tester these are indeed the correct wires (your tester will alternate with the direction indicators on both wires);
• switch the hazard lights off;
• now put the direction indicator down (left blinker on) and verify that the green wire is alternating while the blue-green wire is not (if it doesn’t you need a key in the ignition and turn it until it does);
• reverse the procedure to test the blue-green wire;
• switch off the ignition;
• cut the green and the blue green wire approximately 3" away from the red junction box (you can also use these special cable connectors, then you don’t have to cut the wires);
• connect the two wires with a connector inserting the one wire coming from the sml (you probably need to extend the length of the wire coming from the right side of the car);
• don’t mess up the colors;
• connect the two other wires with a cable connector to the specially provided ground point near the inner grommets, one on each side;
• test if everything works as intended;
• put back everything that was removed earlier;

• sml from IPD or from a friend in Europe (=cheaper); 
• 4 ea. 3523813 wire plus connector 
• 2 ea. 9144275 connector housing 
• common sense