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Phil, you just said "I have no wire at the key that is hot only when the key is in position 3 (cranking)"
There's your problem. Pin 50 on the back of the ignition switch (the pink wire) is supposed to be hot when the ignition switch is in KP-III for cranking. The other end of the pink wire is at the PNP start inhibit switch, so if that was easier to get to then you could have looked for voltage there. Of the few ignition switches I've needed to replace, it was pin 50 that was the problem, likely from all the accumulated arcing that goes on every time you attempt a start.
BTW, nothing in the start circuit that's involved with cranking involves the relay tray and fuse panel, so no worries about having to remove the radio and center console side panel. After you've done it a few dozen times, removing the panels is now automatic for me. You can more easily take the side panels off the tunnel for limited access to the PNP switch and its connector for testing.
Also, there is no special headlight cutout circuit during cranking. It's all done by the ignition switch. In KP-II, pins X, 15R, 15I and S have power, while in KP-III only pins 15R, 50 and S have power. Pins X and 15I run the unneeded high load circuits like headlights that are switched off during cranking. This can all be found in the green manual.
As an added reference for your car, the Volvo master wiring diagram for the 1987-on 740s that's used by Haynes in their 740 manual can be found here https://www.v8volvo.se/mekartips/volvo/Filer%20740/Volvo%20740-760%201987-1987%20Haynes.pdf It should be reasonably accurate and match the green manual. The starter circuit is at D-3, showing the pink wire off ignition switch pin 50 to the PNP switch 71 and then to the starter motor as the blue-green wire. The dashed lines at the PNP switch indicate that a jumper is used there instead for a manual transmission. 212 is the remote starter connector under the hood (I mistakenly said P is a purple wire, it's pink -Volvo calls purple VO for violet). The dashed lines for 130 in the diagram are for the glow plug in diesels and 293 is a connection for the idle valve relay used in the B200K CI K-Jet engines that may still have been present in Europe. Neither of those appear in the 1989 green manual.
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Dave -still with 940's, prev 740/240/140/120 You'd think I'd have learned by now
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