This might be an easy fix, or not. In the older cars, pre 2001, the electronic climate control has a cabin temperature sensor in the center of the dash. It looks like a small grill, and if it goes bad the system might think the temperature is too hot in the cabin.
Turning the control to the "max", either cool or hot, bypasses the sensor. BUT, if the sensor fails completely, then the ACC/ECC usually has blinking lights and turns off the automatic function right after the engine starts up. Making sense to you? Often, the temp sensor gets clogged with dust and just needs cleaning. On the older V70s, pre 2001, the control unit is pulled out of the dash, and you can then reach behind the temp sensor and remove it for cleaning or replacement.
A dealer or a good Volvo independent with a volvo scan tool can read the codes from the system and tell what is wrong within secconds.

The noises you hear at start up are from the ECC/ACC doing a self check. All vents are moved and the AC is started up and shut off. It takes about 20 seconds or less to do this and is quite normal.

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