[DSK]

I'm not overly clued up on this but is this the 4wd haldex issue?

Can it be driven in 2wd without any performance loss?

As the car is in good condition otherwise and its a an 'R' which Volvo have never made since, I'd say, keep it running, in either 2wd if you can and or speak to someone in the know like Tim Williams on T5D5 forum about repair options.