Could be:
U-Joint, Ring and pinion gear, Splined yoke on tranny (if Volvo's have them, which I am not sure of.

I doubt it is in your tranny, although it may be.

Best way to tell... Get your brick on a lift or get the rear up on jack stands. Put it in neutral with the P-brake set. Rotate the driveshaft by hand while you are under the car and see where the play is. listen and look closely. Spend 15 min or so under there and you'll be able to figure it out.

Good luck.