I haven't given up hope yet. I'm very willing to tackle a head gasket job. We have fallen pretty hard for this car and are super bummed at the prospect of losing it. I never paid much attention to the S40/V50 because why bother when the V70 is bigger with the same fuel economy? But this car's six-speed manual, turbocharged power and compact size is a fun combination. We used to own a Mini Cooper S (which we loved); this car is comparable in speed but nicer, more comfortable, but softer.

So the first link you provided, a turboless slushbox just isn't going to cut it, a bridge too far after enjoying life with a turbo 5-cylinder mated to the M66 manual tranny.
The C30...the life partner has always been a fan. This current S40 has brought me, willingly, into alignment with that fandom. I always prefer a hatch or wagon over a sedan. This car also has me looking at C70s too (another car built on the P1 platform). Show me a T5 6-speed C70 convertible for a good price and we'll forget all about this current car!

Again, thanks for the advice and kind thoughts. They are appreciated.

Best,
Will