So, reading between the lines in your post I take it that you have fuel 'at the injectors', it is just that the injectors are not firing?
I assume that the fuel pump is running through its prime cycle to pressurize the fuel rail which indicates that the basic functions of the D jet controller are alive. For your particular problem, Ron's included description of the 'Chris Mullet' test basically sets out the process to follow.
However, before removing the injectors and spinning the distributor as described, I would first do the more simple 'enrichment test'. You need to do this test in a quiet area because you are listening for the click of the injectors opening and closing. With everything in place
1) turn the ignition to run (engine obviously not running)
2) allow the fuel pump prime cycle to complete
3) manually operate the throttle switch from full closed to full open and back
As you open the throttle to full open you should hear 11 or 12 clicks (can't remember the exact number) and no clicks as you close it. This test does require that the throttle switch is functioning.
If you hear the clicks then the injector driver circuits in the controller are functioning and at that point you could move to the Chris Mullet test and spin the distributor. Typically, rather than spin the distributor I would first suggest examine the wiring to the D jet contact switches in the base of the distributor to look for damage and check the operation of the switches as described in the Fuel Injection Fault Tracing Manual (page 2-21).
https://volvo1800pictures.com/docume...lt_tracing.pdf
However, since you have fitted a 123 distributor you can't do that although you can examine the wiring to make sure that you have not had a failure there. At this point you could proceed to the Chris Mullet test. If you fail the Chris Mullet test then you have a problem with the 12 distributor, the wiring to the controller or a problem with the speed sensing / trigger circuit in the controller. The latter is not impossible; but, unusual as the controller is probably the most reliable component on the D jet system. If you still have your original D jet distributor I would be inclined to re fit it to see if this resolves things. Unless you have some electronics skills testing to determine if the outputs of the 123 distributor have failed will be somewhat complicated.
I am suspect about the 123 distributor mainly because it was a recent fitting. I am not implying that the 123 distributor is a poor design; but, it is all electronic. Electronic failures tend to have a bath tub like failure curve. They may have a higher infant mortality and if they make it past that stage then they are usually good for the long-run until old age gets them. Your 123 distributor might have had an infant mortality problem.
The non functioning cold start valve may or may not be relevant. You did not specify the year of the car and that is important since the cold start mechanism changed significantly around 1972 or 1973. On the later cars the cold start was pretty much independent of the controller and should function during cranking - as long as the valve itself hasn't failed which is not uncommon. On the earlier cars the cold start is controlled by the controller and that might be a relevant symptom.
The purpose of the diode in the main relay is to block the relay from energizing in the event that somebody connects the battery in with the polarities reversed or tries to jump start the car with the jumper cables reversed. Reversed polarity would damage the controller so the relay is prevented from operating. If you did not reverse the battery polarity with the diode less relay there should not be an issue. When I was younger and did not have the $ to cover a genuine failed main relay in my 142E I used a $ 3 automotive cube relay as a replacement without issue.