Just to let everybody know. I fixed the problem.
Problem was with one of the wire feeds to the horn.
It had corroded inside the plastic outer cable covering. It looked perfectly OK and was not suspect.
I had some tips from a Volvo mechanic who said: "check the wiring, it will be rotten". He was right but it was not obvious that this was the problem.
One traced repair was simple. However, Volvo should be shot for placing the horn and the wiring in such a stupid location. There are many other better locations on the car that would offer much better protection from the elements.
Thanks for all the suggestions.
Q.
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