When I see that code and look it up, I get "Catalytic Effeciency Below Threshold (Bank 1)" Bank 1 usually refers to the front 02 sensor (you have 2, one before the CAT and one after it). Somehow the front 02 sensor isn't sending enough of a signal to render the CAT to be effecient as it should be...the second 02 sensor will sense the difference between itself and the front one and register the data as to how the CAT is doing. Your condition unfortunately could be caused by several different things and that's why AutoZone tells you 4 different possibilities. Pursue each one by how simple it is and by cost. Sure, the CAT could be going bad but then you usually will smell it (rotten eggs) and you will have some thick exhaust. I don't know where he's getting engine seal issues. With a misfire, you would usually get other codes. I suspect a large vacuum leak somewhere. Have you tightened your gas fill cap really good? Did you fill up recently? If it is loose it could cause a large vacuum leak. Could be as simple as that or one of your vacuum hoses or vacuum hose elbows springing a leak. Check these out first.
CEL= Check Engine Light
OBD= On Board Diagnostic System (you have a place near your dash and steering wheel...I'm not sure exactly on your car, where you hook up a scan tool to read the codes). The system to check your codes is the OBD. On your car you should have an OBD-II (second edition of sorts) system.
The warning system light on Volvo's hardly ever malfunction. In fact they are usually more sensitive than they ought to be. So if a CEL comes on, there is a good reason. Take it as a warning and don't drive your car unless you figure out the codes. In your case, none of the codes are going to ruin your car (such as engine, coolant, transmission codes). In your case, I would be most concerned (as you, wisely are too) of an engine seal oil leak, but if you have no indication of this, I would rule this out as the culprit pretty quick.
You never said how your car was driving. Is there rough idling, cutting out, misfires, etc.? Do you have any oil leaks...losing coolant, etc.? If there are not concerns except for the light being on, then tighten your gas cap really good (several clicks) and drive your car for awhile. If that was the issue, the light will go away on its own.
Oh, by the way, with a turbo you should always use better than the lowest priced gas. Check your owners' manual and stay with what it says. However, I don't suspect that as being the culprit.
'98 S70 T5 Emrld Grn Met/Beige Tons of Upgrades Mobil-1
'04 V70 2.5T Red/Taupe Some Upgrades Mobil-1
94 850 Sedan NA Drk Blue/Tan
'00 V40 Purple/Grey Mobil-1