Art's right- the Volvo dealer parts department will cut a new key, on the spot, from your VIN number. They look up the key codes, and punch them out on the key cutter by hand. It's pretty cool. The blank lists for about $15 US, and that's all you pay for.
Now, hopefully you can read your VIN# through the windshield...
I locked the keys in one of mine, and it had a dash pad covering the VIN!! Fortunately I had the title filed away....
I would expect that the dealership will not give you too hard a time regarding proof of ownership. It is, after all, a 17 year old car- who's going to steal that?
hope it works out for you. Tell that locksmith to take a hike.
Oh, and if for some reason you do decide that you MUST get into the car without the key- break one of the rear door roll down windows. 240 doors are literally useless at the junkyard- no one ever needs them, other than the driver's door. It only takes 1/2 hour to replace a broken window glass, doesn't require any special tools, and you can get one for 10 bucks. It'll take you longer to vacuum up the broken glass. (And you can avoid a lot of that if you tape the window before breaking it). Don't ask me how I know this.
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Rob Bareiss, New London CT ::: '87 244DL/M47- 221K, 88 744GLE- 202K, 91 244 181K, 88 244GL 145K