How to go faster, stop quicker, and turn harder. Chips, exhaust, larger turbos, bigger/slotted/drilled rotors, high performance brake pads, manual boost controllers, performance shocks/struts/springs, airbox mods and more! Also discussion on HID and Xenon lights, aftermarket foglights and other exterior lighting.
Decide what area you want your car to perform better. If you want straight line performance than read the "how to tip" on increasing your boost. I increased mine 2 turns. Buy a good air filter, and ditch your muffler for a after market "turbo muffler" or "Flow Master". Those three items should make your car a 14 sec car.
If you want it to turn with the BMW M3 at the end of the long straight, add larger sway bars with good bushings, install a (good) set of lowering springs, and for that added touch 15mm wheel spacers in the rear.
Of course buy yourself a great set of brake pads to help slow it down.
I have all of the above except sway bars added to my car and the difference between now and stock is crazy. I run my car on the road course at Phoenix International Raceway, and the in stock form the tires would scream just looking at the coming corner. Now with the car being lowered the tireSsare silent and my track times went from 1:27 down to 1:22. I just added wheel spacers and hopefully will get into the 1:20s.
IMHO, the biggest bang fer the buck handling improvement is IPD sway bars. Much bigger than the strut brace. The brace is nice, but do the sway bars 1st.
Personally I would only add a bigger front sway bar. Volvo 850's have an over-steer handling trait, which means when pressed in a turn the car will loop. The bigger bar will change the handling Characteristics of the car altogether. The first thing you'll notice is that the car turns immediately no lean, just turn. It changed my car so much that I couldn't believe such a small change (3mm) could make such a difference. The width of the sway bar determines how much lean the car is allowed in turns. Small bar, lot's of lean. Big bar very little lean.
To answer your second question, plan on spending a good few hours replacing and installing your sway bar. IPD's front sway bar is 25mm 3mm larger than stock and comes with new hardware to change out your stock parts with.