I went through this with Li'l Red while I was in Panama. I did valve jobs,
headgaskets, and LOTS of other things. The complete story is below:

For some time I had experienced problems tuning up the red 122S
and was at a loss to explain it. In spite of new plugs, ignition
adjustments, etc, it got worse and worse. It finally began
backfiring through the rear carburetor, which further mystified
me. It was a lot worse when the engine was revved up. I
couldn't find anything especially wrong. Compression wasn't
great but the back cylinders were better than the front ones, and
the problem seemed to be in the back. In spite of the
compression readings, I did a valve job, which made little
difference in either the compression or the backfiring. Finally
one day I disconnected the spark plug wires one at a time to see
if there was a cylinder not firing. To my amazement, when I
pulled wire #4, the backfiring stopped, but when I raced the
engine, it blew a cloud of gasoline vapor in front of the rear
carburetor intake (??). That prompted me to check the lift of
the valves, and I found the #4 exhaust valve didn't open ANY.
After firing, the only way the exhaust could escape was back
through the intake valve and the carburetor. It was my first (of
several) Volvo cam failures and resulted in a complete rebuild.
When I took the old cam out, there was no discernible lobe on #4
exhaust. IPD is right when they say that using worn lifters is
false economy. I only reground one, and it didn't seem to be
worn MUCH, but.....


--
George Downs, The "original" Walrus3, Bartlesville, Oklahoma