That's what the parking brake is for!! You are quite right, the key is not supposed to come out unless the key is moved to pos 0. And you cannot move to pos 0 unless the selector is in P. Something is broken internally.

Replacing the key portion of the ignition switch is expensive and a real bother. The switch has to be ordered from the factory, it will come with an extra key and will supposedly work with your security code. I would check with the dealer about that first, you do not want to be surprised by requiring a $100 code upgrade.

Many web sites say that you have to drill out the 2 bolts holding the lock to the steering column. A better method is to use a punch/drift and turn the bolt out of the hole - faster and much easier. I think someone on Volvospeed wrote it up.

Klaus
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Always willing to listen, just not able to take direction.