I had a Subaru and was told the same thing when one of my tires went bad; had to replace all four or risk damaging the AWD system.
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Sullivan V70R/AWD/2000

It's in your owners manual, the info regarding the need for 4 equal size, same type tires and your friends obviously also havent read their AWD owners manuals either because it's true of ALL 4WD, AWD vehicles. I use to be a Subaru tech as well and I know that they have the same requirements or else problems occur. I will say that with Subaru, when one installs different type, different run-out (size) tires and then experience problems (vibrations, binding), it's correctable by simply putting the right tires back on (yes, 4 of the exact same) unlike Volvo AWDs which does serious damage to costly AWD components.
Subarus, Jeeps, and other SUVs have the same tire requirements but failing to follow those requirements doesn't automatically destroy expensive parts, that's the difference.
The good news for Volvos future AWD owners it's a new computer controlled system which shouldnt be as tire specific, although I'm sure it's highly advised. The new AWD S60s and upcoming XC90 have the new system and hopefully the '03 V70 XC will too? (havent heard yet).

It's the awd system used. The system on the Volvo is a primarily 2wd system, that only engages differentials to the rear wheels when necessary (i.e. slip is detected). However, domestic cars, and the sub awd are awd all the time.