Jim is spot on, $2000 YIKES! Get a new mechanic.

Ebay ad $203.00
Steering Rack and Pinion for Volvo 40 Series 2001, S40 2002-2003, V40 2002-2004
COMPLETE UNIT * LIFETIME WARRANTY * FREE SHIPPING
Item Information
Condition:
RemanufacturedRemanufactured
“Remanufactured in Detroit, MI, USA!

It's not rocket science to replace a rack. Although you'll probably want
a front end alignment. Ask around the local garages to find out who is the alignment ace in your area. Forget chain stores.
While you're at it ask about your rack, get a reasonable quote if you actually do need it from the alignment ace.

Jim's point to flush with new is a great idea, but how exactly?
Maybe unhook an fitting and continue to add at the reservoir with the pump running while catching the old dirt fluid in a pan of course? I have used a turkey baster to remove all the hydraulic fluid I could but that's not a flush. Maybe some heavy hitter can chime in.

I bought my 740 needing a rack- there was a bad leak. When I got it home I de-greased the mess around the rack and found that the rack was fine and the
steel hydraulic line had a pin hole leak. It cost about $42 for the Volvo line. It went in easily, and all was well for short money.

Finally I'm told by a local ace mechanic that if you have leaky seals the magic
ingredient to swell seals is brake fluid. Use only a cap full in the crankcase for RMS and a small amount for the rack. He warns only to use a little. Funny if that's all that pricey commercial RMS treatment is bottle of ordinary oil with a little brake fluid. :-(

Ahoy Jim, send me an e-mail.

Cheers, Bill