Hello and goodmorning, first I'll say hello, and secondly expect some hostile responses to using a 340 as a drifter, there are alot of good cars ending up as erffectivley scrap.
The best place for parts to turn it into a drifter would be on the volvo 300 forum:
[url]http://www.volvo300mania.com/forum-uk
The process to turn it into a drift machine is lowering blocks for the rear springs, and lower and stiffer springs and shocks for the front.
The best way to lock the diff is via MIG spec, ie weld it up, very easy to do, and yes the 1.7 is more than enough to drift, infact it is the ideal car for it.
Strip it out completely put the parts on here fit a hydraulic handbrake and enjoy, but please if you find a low mileage car with a good body maybe offer it here for sale before it turns into another drift car, there are plenty of ropey examles around fit to drift, I drift a 200 for fun
