I can't help with the low power issues but you're correct about a runaway being the turbo seals, as in oil seals.
The seals when leaking feed oil into the turbo and into the engine, this is then burnt hence the oil smoke from the exhaust.
I've known people repair cars (non volvo) after a runaway with a new turbo, if that was the issue and the high rpms didn't do any damage then its possible a new turbo will get you back on the road.
Sounds like you need a garage willing to take a look and prepared to have a go at fixing it if they think it's salvageable.
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