Damian;

Although it's a thin spot, I'm pretty surprised to see a crack there...that's a pretty low stress part of the assembly...I'd have it welded...and while the piece is off, have a machinist check it for warpage ...from your description, it sure sounds like something is askew...I don't know who made those...Volvo or Laycock, but if indeed it was a piece of the finest British material and workmanship, it wouldn't surprise me if it was warped like a pretzel...just like a lot of the engine blocks I saw back in that era...

Cheerio