Hello Steve and fellow Volvo owners.
I have had my share of problems with the repair of these engines, ie cracked blocks, warped blocks, headbolts that never get to the torque value, Threaded holes in block that need tapping for proper torque of the bolts, leaking headgaskets at the oil passage, bolts breaking. All the above and more. I have found that to do the best job of retorquing the headgasket is to make sure you have new bolts, the holes for the bolts have been chased with a thread tap, the block surface with the dowel pins removed sanded with a 400 gritt emery cloth, the cylinder head resurfaced or sanded again with the 400 gritt emory cloth. To keep everything straight I use a 1/4 inch piece steel attatched to a 2x4 and wrap the emory cloth around that. When I torque the bolts I start in the center and move outward. I like to coat the threads of the bolts with a white lithium base grease to prevent binding. The first torque is 25 foot pounds, the second torque is 45 foot pounds, the third torque is 45 degrees, the fourth torque is another 45 degrees, the final torque is another 45 degrees. I use this torque for all the 4, 5 and 6 cylinder aluminum engines. I have had one comeback and that was my own wagon parts runner. I dented the gasket when I installed the head at the rear oil passage. I was in a hurry. I have saved 2 blocks that have cracked and the cracks on the others have been almost identical to the ones I have saved. The crack starts just below the headbolt threadhole and travels the length of the block. I hope this helps anyone tackling the head replacement or gasket replacement. I love the engine when it runs with no leaks, but it can really try your patients when it doesn't want to seal properly.