You're actually lucky to have the cylinder and key in hand. Most times you can't get the cylinder out of the steering column because the key is jammed in the wrong position.

At this point, if I were you, I'd take the unit to a locksmith that has experience with laser-cut keys and get them to open it up. You'll likely find that one or more of the waffers (no pins in there) are bend. Get them replaced and then order a new key from Volvo.

The locksmith who repaired mine advised me that since the tolorences are so tight within those ignition cylinder, that a slighly worn key will usually cause the problem.

Good luck!