Manual must be wrong: 15.8gal is the spec I have for my '86 wagon, and IIRC true for the '85's as well.
http://new.volvocars.com/ownersdocs/...gle_wagon.html
Later wagons had bigger tanks, 19.xx gallons I think. I had a '93 960 wagon one time that was in that ballpark. Later sedans with IRS had a different tank molded to fit around the different rear end that might have been larger too, but I don't think it was over 20gal. The only thing that *does* have 21-gallon capacity is an early (1983-1984.5) 760 TD sedan, which have a second auxiliary long-range fuel tank mounted above the rear axle just behind the rear seat back, which fills through the regular filler neck and acts as a transparent extension of the regular under-floor tank.... this eliminates the pass-thru on those cars but affords 21 gallons of capacity. Maybe you're somehow reading that figure instead of the correct one.
One time a few years ago I drove my 1983 764 TD from Seattle to San Francisco and back for a long weekend. I filled the tank before leaving Seattle, then only filled up twice while on the road, averaging about 31.5 mpg during the trip. That 600+ mile range is nice on long trips.
Even the wagon with its 15.8gal tank does 400 miles easily, though -- no major hardship, really....