1) replace the front rotors or use Volvo brand pads. Maybe both. Check the front wheel bearings for play as well- they require regular adjustment so they do not get too loose.

All the rest: I bet you've got an air leak somewhere in the intake manifold plumbing. This would explain smoke, whistling noises, lack of power, and transmission weirdness. Basically the turbo is sucking tons of air, compressing it, the fuel injection is measuring that air, you've got the throttle open a lot, and then the air is leaking out before it reaches the intake manifold. So the mixture goes rich, the trans thinks it should be in a different gear, the air makes a noise as it escapes, etc.

Thoroughly inspect all rubber hoses downstream of the turbo. Oil attacks this rubber, and weakens it. I've seen rubber so degraded you could see the cloth reinforcing inside it. Most likely (and thankfully cheapest) hose to replace is the outlet of the intercooler, top driver's side of the engine. The bottom of that short hose is often a source of leaks. But inspect them all and good luck with it.
--
Rob Bareiss, New London CT ::: '87 244DL/M47- 234K, '82 245T/M46-182K, '89 244DL/AW70- 212K Not too distant past: 86 244DL 215K, 87 244DL 239K, 88 744GLE 233K, 88 244GL 147K, 91 244 183K