What's this all about. Am I stuck?

That's about right. Laser cut key around $45, Software, yes, software, about $40, and programing labor.

Hmmm. I just bought a '99 V70 and all it came with was a non fob key aka "valet key". Does this mean I can't lock my car? (I haven't tried yet). If I lock it with the key and unlock it will it not start? set off alarm? what?
I don't need a fob, (I can lock and unlock my own doors) but I would like to get a spare key.

A valet key will not work for the glove box or trunk. It will lock/unlock the door and start the car.

Thanks, I can live with that.

Are you referring to the key only or also the remote fob? If the latter, regret to say, for a 1999, they have to program it. About 5 years ago, I replaced both clickers (fobs) for my daughter's '99 V70, and it was about $300 total. The programming only needs to be done once, so if you go this route, buy two new fobs simultaneously.

Your other choice is to buy a new lock from Volvo, it comes with a key and does not require programming.

I have yet to fathom Volvo's dealership program, designed to make enemies rather than foster friendship and trust with their customers.

I have an 04 and they wanted almost $400 for my key! I recently thought I had lost the only key I have to the car, and was faced with having to have it towed into the dealer, and then having them program the new key. Probably would have cost me over $600 if I had gone that route. Then with some luck I found the key. I took it to a local locksmith who had the blanks but without the chip in it, so it will only work to open the doors. That key was ~$40. So I bought it and I use that to lockup the car, and I now leave the main key with the chip in it in the car anytime I leave it at the airport and fly away, or anytime I am at the beach, or anywhere it is easy to lose/damage a key. Its the most cost effective option I could come up with.

No matter how old your Volvo gets - new parts are of good quality - and EXPENSIVE!