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Dear muskox37,
Hope you're well and stay so. C$1,000 = US$791.00. If the oil pressure sensor signal "low pressure" at idle, the first thing to do is to check the oil level, if there's a dipstick. The 2005 XC70 had a dipstick. My version of Volvo VADIS - a superseded dealer parts/service database - does not cover the 2006 models.
If the dipstick shows "low oil", top-up to the mark on the dipstick. If the "low oil pressure" warning light does not come on, you've found and solved the problem.
If the "low oil pressure" warning light continues to come on, when the car idles, that a sign of: (a) a weak/failing oil pump (very unusual) or (b) bearing damage (also unusual, unless basic maintenance - timely oil changes - was not done; or (c) as you noted, oil system sludge that might result from the car being used for short trips, and then allowed to sit, or from the engine being turned-off too quickly, without allowing the turbo to "spool down".
If the car seems to have been well-cared-for, then one can probably exclude neglected maintenance, e.g., running for long periods with dirty oil, which can damage bearings.
Thus, I'd change the oil using a full-synthetic oil, and drive for 1,500 Km. If the oil is a deep, dense black. I'd change the oil right then, and drive another 1,500 Km. If the oil then looks only slightly "dirty", you've flushed-out most of the crud.
If, after these oil "flushes", the "low oil pressure" warning light comes on, there's likely been some bearing damage.
Hope this helps.
Yours faithfully
Spook
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