I have had the same problem with the 2000 V70 that I used to own. It is a broken piece of the lock assembly that is jamming it. If you remove the plastic cladding under the steering wheel you will be able to look up to see the mechanical part of the ignition lock assembly. It is pot metal, but there is a cadmium plated steel square staked in at the bottom (a couple of cm across, if memory serves). If you dremel/drill the staked parts out, you can remove the spring and the broken piece of the mechanism. This frees up the ignition to turn again. Then release the steering lock cable at the ignition lock assembly-- you can just leave it loose in there. Now you can start the car, but the steering lock will no longer be functional, but I wasn't worried about someone stealing a 20 year old Volvo!

I think there are picture tutorials on this over at Matthew's Volvo Site.

Good luck!

If you’re referring to the two snap head bolts that hold the lock assembly to the dash board structure, you have to drill/grind/chisel the heads off of them or drill into them and use an easy-out. You can replace them with regular hex head bolts when you reassemble.

Once the lock assembly is out of the car you can remove the lock cylinder per the video I linked in my previous post. If the problem is what I think it is you can fix it for $0.00. If you want to try the DYI fix then post back once the cylinder is out.

If the wont turn to ANY position , the lock cylinder is trash and is going to have to be replaced. Your going to have to remove the airbag and steering wheel, and drill out the shear bolts that hold the lock assembly. There is a transponder in the key but has NOTHING to do with the key not turning. The turning of the key is completely mechanical. And the cable that goes down to the shifter is not likely to cause the lock to not turn. It would only cause the key not to return to 0 , and t hen you wouldn't be able to remove the key. A locksmith might be able to get it working again, its a crap shoot. You can get the lock cylinder 2 ways from volvo. A random cut key an d lock, which the keys would have to be programed so the transponder would be recognized by the immobilizer and allow the car to start. Or You can order the lock made to the key code for the VIN. then your keys will work.

Having metal in the key slot will turn the chime on, nothing to do with ignition.

Your key does have a transponder. A non working transponder will not let the engine start, key still works. Same with the brake pedal switch, needed to activate the starter.

You will need to remove the plastic around the steering wheel to gain access to the lock. You may find a broken piece of metal between the steering wheel and the lock. Do NOT attempt to take the lock apart! NO, NO.
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Keeping it running is better than buying new