On 850's there was a recall on the heated seats...because there was a chance of fire. Don't know if this was extended to the first year of the 70 series cars or not, but it would be worth checking into with Volvo....also, you should report this incident to the Highway Saftey Administration.

I know that there are teams of people who come into homes which have caught fire and do a thorough clean-up. A friend of mine had a house fire several years ago when his computer caught fire (lucky for him, his house didn't burn down), and it was a total mess. A lot of plastic burned and there was sticky soot all over his house...on walls, in the duct work, the windows, etc. He had to rent a hotel room (insurance covered this) for a couple of weeks while the team went to town. When he moved back in, he had a "house-warming" party and you could not tell there had ever been a house fire. I would say that a team of folks such as this (might be worth checking your local yellow pages) could do the same with a car too...would probably have to take the dash out to get to the vents for a thorough cleaning, etc., but I think it could be done. Then you could buy some parts for the center console, arm rest, possibly new carpetting, and another seat to match was was destroyed. If you can find these people, and have some communciation with them ahead of time, your insurance company might be willing to do allow this cleaning, repair and replacement, including a rental car while you are unable to drive your own car rather than "totalling" out your car which would cost them more money. Good luck with whatever you work out. I know how it is when you've put money into these cars to get them to be top notch!
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1998 S70 T5 Emarald Green Metallic, 2004 V70 2.5T Ruby Red, Previous Owner of Black '94 850 Turbo Wagon. My cars have been running so well lately they've got me worried.