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I would suspect the throttle switch and the idle adjustment.
On Volvos the butterfly should close completely and the
interlaced board on the switch gives a momentary richer
mixture. The finger contact wipes more and thus triggers the
injectors more. If the wiper finger doesn't make contact......
I'd clean it with 1000 grit wetordry and make sure the finger
is springy enough to make good contact. There is a plastic knob
that controls an orifice in a bypass hose. The temperature
compensator vave in the cylinder head may also be bad.
Normally a vacuum leak will make it idle too fast.
I haven't had a Volvo with an auto tranny.
(When they were known for making some of the best
"REAL" trannys in the world, why buy generic at higher cost?)
You can replace the rear main seal without pulling the engine
if you pull the tranny. It is pretty easy but I'd almost
guess it is not motor oil. Unless your ignition is badly
retarded your exhaust shouldn't be hot enough to make much
white smoke with motor oil. Now if you are sucking tranny fluid
into some vacuum fitting....
I think the auto trannies hold up OK but to me they are just
too pedestrian for something like a Volvo.
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