I would bet that you have a leak between the transmission cooler (in the right hand side of the radiator) and the cooling system. You should change your radiator, coolant, and the transmission fluid without delay.
The Ethylene Glycol in the antifreeze will eat the clutches and their adhesive backings in your automatic transmission. In a typical American built vehicle, the clutches usually have a catastrophic failure after about 2 weeks of being exposed to any significant amount of antifreeze. However, the Aisin Warner transmissions in our Volvos seem to be built to a significantly higher standard and there are brickboard members who have driven for as long as 6 months to almost a year before the clutches came apart after a similar event (they also didn't notice the presence of coolant as quick as you have).
I would strongly advise doing the following items as quickly as possible:
1. Replace the radiator and coolant. Use the official Volvo coolant if you can afford it since it contains no Phosphorous. Mix 50/50 with distilled water (never use tap water unless it's an emergency).
2. Flush the transmission. Ideally, take it to a transmission shop and have them remove the pan and attach an adapter over the filter/strainer that can supply clean fluid to the tranny while the car runs for a few minutes. You'll probably use about 10-20 quarts of fluid to get the antifreeze purged from the system, but this is a lot cheaper than installing a used transmission. If you have to do this at home, be prepared to spend a Saturday to pull the pan, clean it out, put the pan back on, and flush the system by detaching the transmission radiator return line. (then run the vehicle until 2 quarts are drained, refill, repeat, etc, etc)
Since you've noticed the problem early enough, there's a good chance your transmission will survive this event and go on to carry you another 100,000 miles or more. -but no guarantees. The sooner you can take car of this, the longer your transmission will last. The worst thing you can do right now is drive your car, or just let it sit. The clock is ticking.
God bless you and your transmission,
Fitz Fitzgerald.
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'87 Blue 240 Wagon, 246k miles.
'88 Black 780, PRV-6, 145k miles.
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