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I have one of the early AWD cars - 1998 V70 AWD (not the XC). I just purchased it a few months ago, and did a fair bit of research on it before taking possession of it.
Basically what you need to know is the early stuff has a Viscous Coupling based system. http://en.wikipedia.org/wiki/Viscous_coupling_unit
It's not computer controlled. The viscous coupling system is very good but has some flaws with regards to long term durability. That is detailed in other parts of this forum well - just do a search for it.
I think in 2001 they went to the early Haldex system which I understand is much better in terms of long term durability. It uses computer controlled, hydraulically activated clutches.
Since then I think it's gotten even better. (2004+?)
All that said I have only minor complaints with my early VC system. Esp the price (esp in comparison to the aforementioned newer models).
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1998 V70 AWD Turbo 180k+
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