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Big problems with 740 700 1991

My sister owns a 1991 Volvo 740 GL which at the moment is causing many headaches. The car has started running bad at low speeds and it stumbles under acceleration or while going up steep hills. It drives fine at 60mph on level road though. When it is stumbling it puffs out lots of blue and grey smoke and smellys like burning brakes. We recently had the oxygen sensor, coolant overflow tank and cap replaced by the volvo dealer. Another mechanic has told us that the oxygen sensor was installed incorrectly. The car seems to loose coolant rapidly and it is splattered all over the engine bay. We have had all the hoses checked/replaced but it still does this. Last mechanic said engine was bad because he claims to have found coolant mixed with the engines oil and told us we need a new engine. This mechanic does not have the best reputation though.... he may be lying?? If you have any idea at all of what is going on (and how to fix)with my sisters car a little help would be greatly appreciated. Any suggestions or ideas.... we need them badly. Thanks !!!

Brian






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