1.) I'd suggest finding a reliable independent Volvo shop. Most areas that have a couple of Volvo dealers also have a couple of independent Volvo shops.
2.) "Flashing arrow" can be the PNP switch, but "shudder" is more worrisome. Yes people have reported transmission failures here when the fluid isn't changed. Volvo claims it's "lifetime" but most of the indy Volvo shops and some dealers suggest routine fluid changes.
3.) My stack of service invoices is waaaay past the point that it will fit in the glovebox! Yeah, I've replaced the window switch, too. And I'm going for my fourth windshield, fourth cabin temp sensor, etc. etc.
Except for the transmisison and for an XC70, yours doesn't sound bad at all. You do have the first attempt at a Volvo AWD system, threads here and elsewhere suggest that the new Volvos have a much less troublesome system.
4.)If you had a Volvo 240 that you nursed up to 170k, that was one of the simplest vehicles around, there simply weren't that many components to break.
5.) I don't think any European car is likely to be much better than your Volvo XC70.
My wife drives a Honda Odyssey which has been flawless for 80k, I also drive an Acura which has been flawless.
I plan to trade the Acura for another Volvo this spring.
I've been looking for a used Volvo for my daughter, and I found TWO XC70 Volvos, both light silver but different years, parked together on my Honda dealer's used car lot. I can just imagine the scenario that took place, and also imagine the brand-new light silver Honda Pilot and brand-new light silver CR-V driving out of the Honda dealer.
I've been driving Swedish iron for 22 years now so I think I know what I'm geting into, but for most people a Eurocar (of ANY make) is not the best choice. I happen to like the comfort, handling, ergonomics and safety of a Volvo and figure it's a cheaper vice than many others. Good luck!
-BTC
'98 V70 T5 5-speed "Winter Beater" 154k mi, front IPD stabilizer bar, rear factory HD bar, Bilstein HD, Volvo strut tower brace and skidplate, e-codes, V-1, Mobil-1 since new, Michelin Arctic Alpins
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