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My '98 T5 has both an inside handle and an external key lock.
Since I had 3 (THREE)(III) power door locks fail during my initial warranty period, it's completely discouraging that Volvo, even under BMW's legendary Wolfgang Reitzle STILL hasn't got it's suppliers QC under control 4 years later!!!!!
Do you have the 3rd seat? A longshot..... If so, I would suggest scanning the owner's manual to make sure there isn't some sort of lockout switch somewhere on the driver's door that prevents the rear hatch from being unlocked with the remote.
-Groundhog
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