Actually, a lot of S80s have trans failure. Reason is, Volvo calls the fluid "lifetime fluid" but it is not true at all. The fluid gets very old and gunky with age. It eventually prevents the trans from performing well.
Give this a try first.
First off, when you put it in reverse, does it say R on the dashboard? If not, you could have a linkage problem. You could try giggling it and seeing if the R appears.
If thats not your problem, I suggest you flush the trans and change the filter. You can DIY or have Volvo do it.
Heres a guide:
http://www.matthewsvolvosite.com/forums/viewtopic.php?f=11&t=20278&sid=c5c5e825420b2721a05477a47e08aeee
Good luck. And use Dextron III or equivalent fluid.
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Jake
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