One other simple thing to check - firing order. The alignment of the plug wires on the rear mounted distrubutor is easy to mis-read and swap #1 and #2.
That can cause the symptoms you describe.
Rear distributor: Left-to-right terminals are 4-3-1-2
Left is passenger side, right is driver side - go to the following site and move your mouse pointer over the drawing of the distributor for a picture.
http://www.vlvworld.com/indexframe.html?VolvoRepairManual/700_2_9.htm
Plugs: Front-of-engine-to-back: 1-2-3-4
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