Is there a specification for fluid, my 740 manual says 'ATF'. Is it Dexron or Ford? Maintenance schedule says flush is not required, is there a down side to doing it? Should fluid be replaced by removing a hose from pump or steering rack, or is draining the reservoir a couple different times sufficient?

PS fluid is indeed the same as your ATF fluid. I am not sure of your year for the S70, but the earlier models used Dexron, Motron whatever.
I would flush it rather than dribbleing a little bit out of the bottle. The reservoir bottle has 2 lines going into it, the top one is from the steering gear(output) and the bottom one is for the pump(input). If you disconnect the top line and feed it into a small pail while pouring fluid into the reservoir, that should work. At least it works that way for the 740.
There are probably better ways and if you look at the FAQ section...

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

thanks, the 740/900 faq has a lot of info, just now sure if 1998 s70 is same.