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If the key can be removed in any position but "0", you should replace the ignition lock assembly.
I have seen the ignition locks of 1800E/ES, which are very similar, do the same thing and worse.
In one case the steering column lock engaged while the owner was driving on the freeway. Fortunately for him the steering column locked while creeping in bumper to bumper traffic and the steering locked in a direction that took him off the freeway and into the emergency lane.
However, I think you may have another problem with the electrical switch.
Take a picture of the other side of the ignition lock where the switch is mounted and post it, preferably in a smaller format.
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Eric Hi Performance Automotive Service (formerly OVO or Old Volvos Only) Torrance, CA 90502 hiperformanceautoservice.com or oldvolvosonly.com
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