Had similar problem w/2000 S70. Only additional symptom I had was that sometimes all the idiot lights did not come on after a no start.

Solution was to replace what I had previously referred to as the key reader, but think it is correctly called the immobilizer; It is an annular ring around the ignition switch. A friend diagnosed it for me and installed it. took about an hour. Forgot how much it cost but I would have remembered if it was substantial. I don't remember his changing the software but he may have as he is a Volvo tech.