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No, it is not an interference engine.
I am currently in the process of swapping engines in my son's 1988 744T. It has piston slap that had people shaking their heads.
Anything you want to do to the engine should be done before installing it. I replaced the rear main seal, the front three seals, the waterpump, the timing belt and the exhaust manifold gaskets (using OE Volvo). I used plastigage to check the rod bearing clearance, checked the valve clearance, and replaced the cam cover and oil pan gasket. I cleaned out the oil separator.
I rebuilt the turbocharger, flushed the oil cooler and replaced the seals in the adapter.
The flywheel is currently at the machine shop and the clutch kit is waiting to be installed.
All of this on an engine I have never heard run. Several years ago in a weak moment I purchased this engine on eBay. It has a rebuilt head on it and so far it checks out, but I won't know until I fire it up.
Randy
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