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I had the same problem with my 98 S70 in which there was a groaning noise somewhere along the steering column. As it sounded like something rubbing I checked the entire length of the steering column. It turned out the noise was coming from the lower steering column & the rubber boot near the fire wall. I applied some silicone lubricant inside the rubber boot, actually silicone tire dressing and it completely eliminated the groaning. I usually have to re-apply silicone every 4-5 months to ensure it's noise free.
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