Quite honestly, you could probably shoehorn the B6304 into the compartment without not too much work. But outside of that, the engine wiring and management systems are so totally different, you might as well try to drop a Toyota 1MZ-FE in there and see if it would run. That is how different the two cars are.

The Volvo repair guy has not led you astray.

Additionally, the transmission on the 960 is electronically controlled, and needs it's own wiring. Sound complex? We're not done. THe transmisison in the 740 doesn't bolt up to the 960 engine.

If you were serious about that project, the only way to do it would be to get a whole 960 that maybe was wrecked or something, and transport every single thing into the 740.

But by the time you were done, you might as well just have bought a running 960. It would be cheaper and easier.
--
1992 940 wagon, very low miles
as well as others.