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Dear vwcycling,
Hope you're well. As dinomartino stated, that's a heater control valve. you dodged a bullet: when that valve - or a heater hose - fails, coolant loss is so fast, that severe overheating often warps the head, requiring a headgasket replacement. If yours is the factory-original unit, it does not owe you a penny. It is well past the end of its service life.
Get a metal-plastic replacement heater control valve, i.e., one identical to the failed unit. The valve is Volvo Part #1259327 or 9447896. Be advised: Volvo now supplies an all-plastic valve. Therefore, seek an aftermarket unit, or one made by an OEM supplier to another make of car. If the valve matches exactly the size and format of the one you have, it will work.
However, I'd suggest replacing the heater hoses with genuine Volvo brand hetar hoses. Volvo brand heater hoses last reliably for at least a dozen years. In areas with low average ambient temps (e.g., in the northern regions of Russia, the US, and Canada; northern Europe and Scandanavia, etc.) Volvo brand hoses might last up to 15 years. The reason to spend more for these hoses, i.e., Volvo brand versus aftermarket, is that these hoses are not easy to access, and so not easy to inspect.
Hope this helps.
Yours faithfully,
Spook
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