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Tony --
I can only comment on question #2, the cause.
The problem is the chemical properties of the plastic (synthetic) insulation used on the wires supplied to Volvo by their vendor (probably one vendor, but maybe several). It's highly unlikely a corporation the size of Volvo would attempt to make wiring harnesses themselves -- they farmed out the job.
The plastic material has lost its "plasticity", probably because the plasticizer has evaporated. A plasticizer will evaporate most quickly in an area of heat and solvent -- near the exhaust system and oil filter. When this happens, the cross-linked polymer becomes brittle and crumbles. In plastic, the plasticizer is like a lubricant -- it keeps the polymer molecules flowing and moving so they remain flexible. It's like water in molasses -- the more there is, the more fluid molasses is. But when it all evaporates, the molasses crystallizes.
(Comment -- plasticizer is what fogs the insides of car windows. When it evaporates, from sunlight, it condenses on windows -- and eventually your interior plastic, such as dashboards, becomes brittle and crack.)
Years? Probably late '70s to mid '80s. My '81, both '82s, '83, and '86 have it. My mother's '89 does not (but check back in 5 years).
Other Bricksters have abundant experience buying for the lowest $$$. Me? I'll build my own -- and when I develop plans, I'll post 'em. Someday.
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