I know this issue all too well.

First find out if your transmission is from a later model Volvo. If it's a 1967+ M40 the angle of the speedometer drive comes out at a much sharper angle and leaves little to no room even for an angle drive. I purchased an angle drive to solve this issue and even that was too much for the small space. I've heard that only the early versions of speedometer angle drives would work in that space and the ones available now are too large.

Solutions that I've heard worked and worked for me:

Get an earlier model M40. The issue is further detailed in this diagram: http://www.sure-vent.com/TailHousings.jpg. You might simply have a later model M40. I had to buy another M40 to deal with this issue.

If you want to stick with your the transmission you have, I've been told you can hammer out the tunnel shaft to make the speedo angle less acute. Most people do this already when adding an overdrive.

Buy a speedo angle drive and hope for the best. I have a brand new one I'd gladly sell you but I can't guarantee it will work.