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At the end of your post you mention "16 cylinder". I assume you mean 16 valve, as opposed to the very popular 8 valve.
If you DO have the 16 valve motor (B234F) as I believe, I suggest you DO take the dealer's advice... this engine needs major care at that age. Timing issues are in abundance and if it lets go you will need a head rebuild (likely more $ than the value of your car). See 700/900 FAQ for more info on B234F. Note that the B230F, 8 valve single cam is the ever -lasting. Of course with MAJOR care the B234F can do great, but not for you unless you are an excellent DIY mechanic and very informed about this motor.
Hence, get rid of the car before you have no choice but to junk it.
Don't mean to be harsh, I was in your shoes as have others before. There is no 'non-volvo experienced' mechanic that knows about this engine.
Regards,
Greg Mustang
Montreal - Ottawa
Canada
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