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I assume that the OP has figured this out by now, but for the benefit of others ...
I had this problem with my '02 V70. Since the car was parked nose in to a curb, the first problem was getting the car on the flatbed with the front wheels locked in park. Fortunately, with one person jiggling the key and the steering wheel and a second person doing the same with the shift lever, we somehow got the trans into neutral.
As far as the basic problem, it's apparantly caused by a failure of the chip in the ignition lock. The chip/lock unit had to be ordered from the factory and replaced. I assume the key fobs had to be reprogrammed also. Mine was under warranty (2years/ 42K), so I don't know how much this costs.
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