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I had exactly the same problem on my 1980 five years ago. I added some "Alumaseal" radiator sealant--half the bottle, or half the recommended amount, thinking maybe the Volvo system was smaller capacity than some and I didn't want to plug up anything else.
Stopped the leak. Not the same day but over a period of maybe a week or so. It's never leaked again. I haven't put many miles on it since the spring of 2001 but there isn't any o-ring leak.
I have no financial interest that I know of in "Alumaseal" or whatever company makes it.
Good luck.
Doug Harvey
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