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Nick,
Not enough information to make an accurate diagnosis, but I suspect running out of oil burned/galled a piston resulting in oil smoke (or coolant steam from an overheat). The engine sounding like a pile of bolts... that is ominous. The mechanic should only do a compression test, if the results are positive for engine damage, it is time for a new engine. Once you run these pups out of oil, they are not financially worthy of a rebuild.
jorrell
ps. Don't hit the Volvo dealer in Charlottesville, VA, they seem to believe that all Volvo parts are made of unobtainium! A trust worthy Indie shop should be able to run a compression test while your GF watches the gauge for verification....
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92 245 317K miles, IPD'd to the hilt, 06 XC70, 00 Eclipse custom Turbo setup...currently being enjoyed!
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