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Two separate, coincidental problems I think.
First, I think the ignition key is sticking.
This happens to all Volvos eventually. 7 and 9 series seem especially prone.
First, try turning the key back a little, away from the "start" position. see if everything is normal again. IF so, try to figure if it's going to stick regularly, and you can shoot a little WD40 or PB Blaster into the key hole- this will help a little but not entirely solve the problem.
Sometimes just having too much STUFF on the keychain is enough to overcome the little spring in there, and the lock won't return to the "RUN" position.
The next step with that is to replace the contact part of the ignition switch. This sounds horrible, especially when I tell you that you've got to go to the dealer for a switch (or a good online parts place that sells genuine VOlvo parts). But it's not that big of a job and I think the switch is about $29 Volvo list price.
For the other problem- as the others said, sure does sound like the A/C compressor decided to seize up. Probably going to need a new compressor. Possibly will stop screeching if you turn the heat control away from Defrost or any other position which engages the AC. I do believe the 940 has a belt exclusively for driving the A/C so it can either be removed nicely or simply cut off with a knife until you have a chance to fix this completely.
Good luck with it!
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Rob Bareiss, New London CT ::: '87 244DL/M47- 225K, 88 744GLE- 209K, 91 244 183K. Also responsible for the care and feeding of: 88 745GLE, 229K, 88 244GL, 146K, 87 244DL, 235K, 88 245DL, 236K
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