I'm just finishing swapping a motor out of an '86 240 into another '86. The reason I did it was because I lost a timing belt on the first motor. Took it to a shop that has always treated me well. When they found out it was a timing belt, they told me that as far as they knew, Volvo's weren't interference engines and I was lucky. After installing the belt, they tried to start it and it wouldn't start. They checked compression and found , well, I don't know what they found, a dead cylinder maybe. They called me with the bad news and apologized, and said that all I had to pay for was the belt, as they felt it was their error. So now I know what it takes to swap a motor into a 240.
Problem is, all I read here says that the 230 motor isn't an interference motor. So unless I blew a head gasket, I wonder what went wrong with the first motor?