Helping a friend with their s40.
He told me the master cylinder was bad. So we replaced that.

I was looking at the car and the rear rotors were shot along with most of the pads. So we replaced all of them.

Once I better understood the problem:
Car takes tremendous amount of pedal pressure to stop first two time.

I replaced the check valve (which also has the hose and a pressure sensor.)

I tested the vacuum pump (which passed with flying colors) Same problem. I even triggered the pump on and still had the same problem.

So the only thing left was the brake booster. We swapped that out... no change!

At this point I have no clue what could be wrong. The hoses are in good shape. The caliper pistons push out and back in easily enough...

Any thoughts are greatly appreciated!

I would say this a longshot but I just put an S40 on the road and it had a braking issue. What I found was that each pad fit too tight in the caliper frame. One set of pads were clearly marked Volvo and the other set was not. All four wheels required removal of the pads and filing the backing plate edges to fit the frames properly.
This my first FWD Volvo (have owned-bought-sold many, many, many RWD Volvos -- as well as many other brand FWD cars) and it fell into my lap -- a 2002 model with only 24,750 miles. I thought it very strange that with so few miles at least one set of pads would have had to be replaced - and the Volvo pads were so thick they might have been new as well. My conclusion was that the pads were not manufactured correctly. -- Dave

That was one of my initial thoughts too. Whomever did the brakes last didn't use any grease and a couple of the caliper bolts weren't tight. the pads almost looked glazed but even with brand new semi metallic pads, all the way around, no change.

In testing more today I found the vacuum had more "pull" in neutral than gear. Dirty throttle body?

If it is a vacuum problem, then the brake pedal would be extremely hard to push at all times. Even a small amount of vacuum will allow the booster to give brake pedal travel.

How old is the brake fluid? what do the flex brake lines look like? With pedal travel of about 2 inches and lots of pressure being applied, sounds more like air or collapsed lines.
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Keeping it running is better than buying new

it is something that clears up after a few times of braking. I do get more assist when in neutral than in gear.

brake hoses look great (like actually great)

brake fluid is brand new super DOT4 pentosin from FCP. Had to flush / bleed all lines when I replaced master cylinder, then again when I replaced booster. (Had to pull master again.)

my next step was to make a reducer so I could put my vac gauge on the booster inlet (unplug hose from booster, put into gauge) see what sort of reading I am getting.

wild thought was would a dirty throttle body somehow cause this? Does anyone know how the valve system works with the vac pump? (of course I didn't save the old one to dissect and see how it work)

I found this:

http://forums.swedespeed.com/showthread.php?106932-2004-5-%282nd-gen%29-S40-T5-Vacuum-pump

While not 'related' to your particular problem does mention lack of vacuum due to a faulty oil separator. A dirty throttle body does not affect vacuum unless completely blocked.
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Keeping it running is better than buying new

What that post referred to was the brake vacuum pump and switch. The pump comes on if the vacuum gets too low - usually at engine start. If the switch is broken or the vacuum line is cracked at the junction, there will not be enough vacuum to assist braking. Same is true if the little motor burns out. This could explain why the brakes feel normal after driving a little.

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Keeping it running is better than buying new

Thanks for that link!

I checked vacuum at the booster. (15"HG or so)
I gave up and gave it back to friend. Told his wife that she will not hurt the car by standing on the brakes.

My last idea was to cut the brake pedal lever and lengthen the arm, thereby increasing leverage...

Andrew