so we just got a hand me down 2000 v70 xc with a very loud clanking in the drivetrain! im fairly certain it is the output shaft from the bevel gear to the rear dif. sounds very similar to a bad cv joint when making a tight u turn..click click click..goes away after it warms up..so question

we dont need 4WD at all..and i've heard of 2 things being done to these car
converting it to FWD only by way of

1: putting in a fwd only transmission
or
2: removing this shaft and drive it like so

of course just removing the shaft would be the easiest thing to do, but is that ok to do?

thanks a bunch