Just got back from Volvo service with my problem: they said it was a loose left front wheel and it is somehow common for the S40's. The mechanic said this was the fourth case this year. They just greased and tightened the wheel and everything now is fine--no charges were applied.

I have a S40 (2000) which has a similar problem: I hear a repeating knocking or tapping sound, kind of like if you place a baseball card in the spokes of a bike. It happens only when I turn the steering wheel slightly to the left, up to about one-quarter turn, and only when coasting or idling. I do not have a solution to the problem, but I am taking my car into the shop this week and I will let you know ASAP what happens.

I experienced a similiar problem last winter, in which I heard a light rubbing noise. The noise turned to be the rubber boot of the steering column near the firewall. It only made the noises during sub zero weather, likley since the rubber boot material was harder and less pliable. I applied some silicone tire dressing and it solved the problem. Try using thicker silicone dressing formula as the thinner products seems to run off.