Hi,
It sounds like your Volvo has a warped head. Did your car overheat? This happened to my '98 V90. It overheated and I didn't shut it down soon enough. As a result, about 1 1/2 years later I had a couple of issues. The radiator fluid was going down slightly. I borrowed a pump/pressure tester and could not find the leak. Apparently it was leaking at the warped head. In the morning, when the engine was cold, I had a dead spot when accelerating. Apparently there was radiator fluid leaking into the head thus causing the dead spot.
I replaced the radiator twice before finding out the real issue. Why did this happen? Possibly the pressure in the system was high due to the warped head putting pressure in the cooling system. Also, I'v heard that when coolant leaks into the system, that the exhaust burns this off but it affects the catalytic converter, in a negative way.
I had the head fixed (for the same price) by an independent Volvo mechanic. He tested the cylinder pressure and figured out the issue. So far, no problems with the catalytic converter. Radiator is fine too.
I would recommend either fixing it (1st choice), selling it (2nd choice), or driving it into the ground (last choice). $2K is a good price for a head repair job.
Regards, Rivdog

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It's worth fixin'