My 94 turbo had a similar problem. It appears on 850's that if the engine oil is not maintained, I know, we all maintain our engine oil. But if the oil breaks down it can cause the lifters to stick the valves slightly open. I know, when I heard this I said no way. My car lost compression in every cylinder. The starter would just turn over. Compression was less than 100 in every cylinder. I was thinking I jumped the timing belt. The car did this at idle. It started then stopped, when I turned the key again nothing.

The solution, is to charge your battery, hook up a battery charger, hold your foot to the floor and turn the key. As the Volvo tech told me it could take as long as 5 minutes to start. I got mine started and it had a big miss. I drained the oil and ran ATF in it for a good hour, at idle and low RPM's. The ATF acts as a detergent and will clean the sticky lifters. I used a low weight quailty oil and the problem has disappeared.

So in closing, it might be something as simple as your oil.

The first time, I'd believe 1 burned valve but not 1 bent valve (out of 20). I've seen an occasional burned valve on those engines and there's also a reason for it. If valve timing is off enough for valves to hit, several valves hit, not just one.
The 2nd time? Still...one valve doesn't just stick or bend BUT could burn where it seats and cause low compression. It shouldn't be happening right after the head was removed.
It'll cost you but I'd get another experienced opinion from a shop that knows those engines such as (preferably) a Volvo dealer.

IF valves are burning, you should switch to a good synthetic oil after it's repaired again.

Make sure you are looking at the original marks on the sprackets. Some mechanics
have a bad habit to change timing belt in the position "as is" and make their own marks. Bring first cylinder to TDC and use good light to check marks on the sprackets.
94 850T second engine - due to bent valves.
Good lock,
Joe

well, if cylinder #1 wasn't at TDC, then the timing belt wasn't aligned. I would expect this caused your problem if you revved high (not necessarily over revved since it was out of sync). It's odd that it took 600 miles before you hit that though...I would expect that would have happened immediately. How did you know it wasn't aligned at TDC? These are zero tolerance engines which means if not aligned right, the pistons hit the valves and bent them.