Problem solved.

First I bled the ABS modulator - all 3 outlet ports - got some air out, but not a big deal.
Next I bled each corner - LR, RR, LF and then RF. I took about 1 pint from the LR before all the air was gone. That was surprising to me.
The RR showed no air at all (expected) but still pulled 1/2 pint to be sure.
The fronts showed some air from breaking the ABS modulator connection, but were clean after that.

In the end, I think I had not bled enough the first time. I ran two full quarts through the system and the brakes are nice and tight now. No leaks, no drips anywhere. Very happy.

Thanks for all the suggestions.

Problem solved.

First I bled the ABS modulator - all 3 outlet ports - got some air out, but not a big deal.
Next I bled each corner - LR, RR, LF and then RF. I took about 1 pint from the LR before all the air was gone. That was surprising to me.
The RR showed no air at all (expected) but still pulled 1/2 pint to be sure.
The fronts showed some air from breaking the ABS modulator connection, but were clean after that.

In the end, I think I had not bled enough the first time. I ran two full quarts through the system and the brakes are nice and tight now. No leaks, no drips anywhere. Very happy.

Thanks for all the suggestions.

No.

A squishy brake pedal indicates air in the system, a bad master, or a leak. A squishy pedal to the floor indicates a non-driveable car.

Bleeding it should eliminate air, but you may have to go around the system a couple times. You did get new fluid out of the LR before you moved on, right ?

Given that you did all that, do you have brake fluid in the vacuum line ? Are there oil spots under the car that are not in the center ?

Greg

"At this point the pedal got more squish and goes almost to the floor with the engine running. Never had this in the past."

Existing MC should never have to be bench bled unless you run it accidentally out of fluid.

If the issue has gotten worse and it is not just a perception problem (comparing it unconscious) to another car you recently drove) You have an issue. It is either a failed MC (unlikely at three years) or you have air...and lots of it if the pedal goes to the floor...in one or more circuits.

I will be honest that I do not know a procedure for bleeding the ABS modulator on the early Volvo system like ours. I know on old first gen GM systems is requires a specific order to set a home position on the pistons...I am pretty sure the Bosch systems did not require this.