I believe that you are right here, the top part of the console just broke off. My 1980 had that "hole" for a few years, the plastic top cracked way back in the late 80's and finally broke off; it could not withstand being stepped on lightly by small children using it as a step to get from the back to the front of the car! After discovering the huge 240 parts site on eBay a couple of years ago I replaced the whole console for a few dollars. (Made sure to replace it with the older one without the holes for seated heat switches.)
The 700 series did have a space on top of the console (with a hinged top) this was for storage of small items, a few CD's etc. On my 700 the PO had installed a cup holder.
The person at the dealership is obviously not familiar with the brick generation of Volvos!

Welcome of brick ownership, enjoy your "new" car!

two of them, 1980 and 1992 wagons