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There's a '98 XC here so I have an owners manual right in front of me. In this owners manual on page #92 there's a caution box that mentions not driving with different sized "wheels" and yes, we both know that wheels and tires are not the same part BUT unfortunately there are often word translation problems from different languages and I believe that when it says "wheels" in your manual, I'm fairly sure that means "tires" as well especially considering the tech-net note which spells out tires very specifically.
Volvo nor dealers have any obligation to supply any info to any independants as for one, there's simply no way to know who all those independants are. Many people claim to know things about many types of cars but that doesn't mean that they have the same knowledge or ability to attain info as a dealer. It's for that reason that if you choose to go to independants, you then take the risk that they don't know what the dealer guys do. It's unlikely that an indy tech would know about the XCs AWD tire related problems so technically, they can't be held responsible either IMO.
I can also understand why a dealer can't parts warranty a part installed elsewhere as it was completely installed out of their hands and there's no way to know if the indy tech did the job right or not. If done in a dealer and botched by the tech or the tech failed to notice the tires, the dealer would be responsible one way or another.
As for the tire rotation done earlier at a dealer, there's no laws stating that anyone can force you to buy new tires so at best, the tech or advisor can notify you of mismatched tires then and advise that you replace them all but that's about it. We see several XCs with mismatched tires installed elsewhere yet it's rare when a customer would be convinced to replace all 4 again if the present tires aren't yet bad. The service writer might not even want to mention it as they're fairly sure that the customer will think he's being scammed UNLESS that customer sees the tech-net note mentioned here.
Essentially, now that you've mentioned that all this work was done by an independant, I'd say that I think you're now SOL.
That part won't cost $3,500 in a dealer either, the part's about $2,400 and maybe 3 hours labor but I'd highly suggest getting this resolved at a dealer now as they'll be able to parts warranty the part for 1 year. You'll still need 4 new tires too.
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