B5 isnt the best, no.
A 2004 D5 is a euro 3 unless the xc70 is different to the v70?, for euro 3 the spec is B4, and 5w40 is an appropriate vuscosity for the engine in euro 3. I dont know if they altered the engine when they changed to B5 when going euro 4, if they made anything much much tighter to use B5 that may explain a request not to use 5w40, but from an oil persons perspective it doesnt make sense... 30 or 40 dont mean a whole lot in the engine, what is most relevant is the hths value, this can be the same in either a 30 or 40, B5 is 2.9-3.4, B4 is greater than 3.5, a higher hths (within the realms of sensibility, in these instances (without going into too much technicality) within appropriate grades, ie not a 20 or 60) offers better protection, or at least a better 'buffer' of potential protection under certain circumstances.
If the engine is not designed for an A5/B5 oil it can cause problems, but if the engine was designed for A5/B5 an A3/B4 can be used without problem.
There is a lot of confusion about oil specs. Particularly the thought that B5 supercedes and surpasses B4, when they are actually separate, parallel specs, which behave differently.
This is why I started the oil thread to try and narrow down disparate oil conversations into one place. Ive got some copying and pasting to do here!
