86 Volvo 740 NOx Emission Test Failure

We have been having trouble failing the NOx emissions test. The car is a
non-turbo, with 307K miles. The car runs fine, burns no significant oil,
and is fine with the HC and CO tests.

In 2000, the car (with 248K miles) passed NOx with 1.05 against a 5.77
limit. HC was 0.47 and CO was 2.71. In 2002, the car flunked NOx with 3.38
against a 3.0 limit, with HC at 1.06 and CO at 6.36 both passing handily.
The dealer could find nothing wrong with the car and said that the only
thing left was the catalytic converter. The cat was replaced with a $300.
aftermarket unit rather than the $1000. Volvo unit, and the car was retested
at a remarkably low 0.62 NOx, HC 0.18, and CO 0.55. At the time, it was a
very humid day and the car may not have been thoroughly warm, perhaps having
something to do with the low numbers.

This year, the car again flunked NOx with 4.57. HC (0.88 vs. limit 2.0) and
CO (6.23 vs. limit 30.0) were fine. The dealer's suggestion was to replace
the cat again, but was not encouraging about resolving the problem. "It may
be the engine itself," presumably thinking about combustion chamber deposits
raising the compression ratio. Since the original dealer was not a
certified emissions repair station, I took it to one that was, in order to
be able to qualify for a waiver if expenditures of $200. or more are not
able to resolve the problem. The 2nd dealer found vacuum leaks and a failed
air intake thermostat, and thought they would resolve the problem. The
retest was somewhat better, but still a flunk at 3.94. The 2nd dealer then
said that the problem was a bad cat, even though it was only 2 years old and
59K miles on it. My choices were to buy another $300. cat, and possibly
face the same problem in a couple of years, or spring now for the $1000.
unit. My immediate problem was resolved because I already qualified for a
waiver.

But, in 2 years I come up to bat again for another test, and would
appreciate any remarks and guidance. The biggest question I have is whether
a cat on an 86 does anything for NOx. I thought it addressed HC and CO,
relying on compression ratio and other engine design factors to limit NOx.

Is it plausible that a $300. aftermarket unit would be expected to have such
a short service life? The dealer who installed it, who did not mention that
it was a non-Volvo unit at the time, did not seem to think so at the time.

Should I go for the $1000. unit, or is there some other likely answer? I
hope someone has some helpful experience with this situation. Thank you
d