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How about a timing GEAR? I have this engine in my kid's junker and after 15 years/178,000 miles it's still smooth as glass, uses minimal oil and just passed the state emissions testing with flying colors.
http://www.converseengineering.com/
Hopefully you've also checked and it's not the water pump or tensioner or a roller that seized and destroyed the belt. It's unusual for the belts to fail at less than the specified mileage-time intervals. Also, are you sure the bottom end is tight? There is an epic saga posted here by a former Volvo tech who rebuilt his 960's top end and then saw his bottom end fail. Do a Brickboard search (pull down menu) for "Christine". One (of many) Christine threads is http://www.brickboard.com/OPINIONS/index.htm?id=433381
I'm unaware of a timing chain kit for Volvos, except to buy a BMW or Saab timing chain with the rest of the car attached.
BTW, have you looked under the hood of a 540i? It must be an absolute nightmare to work on. there's not even enough room for a rack-and-pinion, it uses worm-and-roller steering. Look for a 6 cylinder Bimmer. Or a Lexus.
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