I went to the Volvo dealer, and the technician said there was no iminent problem but he lubricated the keyhole with WD-40 and charged for an hour's labor ($105). I wonder if that is the best spray. I guess there are no tumblers since the key is a computer key which may activate a solenoid plunger to unlock the key-turning mechanism. So, maybe a liquid spray is good and graphite dust is not needed. If the ignition lock mechanism fails completely, then another would have to gotten from Germany, i think he said.
I reiterate that my key not turning past the aux position was not related to the steering wheel lock since the key had already gotten to position I, and the steering wheel was moveable.