Your post just triggered in my mind what is happening. I am having the same problem and was looking at the forum for ideas. I recently adjusted the hood release cable on my 1999 V70 XC because only the passenger side would release. I guess I didn't notice right away but my alarm was not setting. I just went outside and opened the hood, pushed the wires for the hood sensor tighter in their housing, (the left, driver's side hood latch has the wires) and reclosed the hood while pushing firmly on the driver's side. The alarm is now working again!
My guess is the hood pin has to be "home" firmly in the latch for the sensor to work.
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