Others have covered the major stuff, but I wanted to reply to your incredulity about horn relocation.

Volvo had the foresight to locate the two horns directly in front of the intercooler, thereby blocking a significant portion of the intercooler from air flow. As a result, the ability of the intercooler to cool down the hot compressed air emerging from the turbo is diminished. This, in turn, diminishes the HP output of your engine.

Relocating the horns allows more air flow across the intercooler, lower combustion air temps entering the cylinders, and more HP ... which is what you said you were looking for. Even better, this is one you can do yourself at no cost. Free HP ... go for it.

See: http://volvospeed.com/Mods/hornrel.htm
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Dave in Virginia; 1998 V70 T5(M): IPD MOTRONIC+ ECU Upgrade, Sport Muffler, IPD Strut Tower Brace; VDO Boost Gauge, IPD Anti-Sway Bars, Rocha ABS Control Unit/// 1988 245 DL Wagon// 1967 MGB Roadster

The first step is to get a new chip. That will get you about 275lb of torque, which is what you need to get from 0-60 faster. Then a new exhaust, then better intake and turbo. About $4,000 worth of new parts.
But be careful. You still have a tranny that is fragile, and you will need suspension upgrades to make your car stop. And a very good radar detector :)

Klaus
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The 164 has a new home, all I am left with are a 95 854T and a 98 V70R :)

Look at IPD's website (ipdusa.com) for some options. The sky is the limit with go-fast stuff, but so is the $$. Have a look at the turbobricks forum too: they focus mainly on going fast. ECU upgrades, exhaust, bigger intercooler, reverse intercooler piping, bigger turbo...

Nate

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1997 850, 1979 242GT, 1990 740GL