My V70 had the opposite problem - it would get stuck in Park. But very likely the same type of cause. When the ignition switch is on, can you pump the brake pedal and hear the click-clack noise from the Park lock solenoid? If that's still working then it may just be dirt and dust in mechanism. This link describes the shifter and shifter boot removal:

http://www.v70xc.com/0/resources/how-to/pdf/gear-selector-removal.pdf

Once it's opened up you can clean things up with some sort of spray cleaner like brake cleaner (that doesn't leave any residue). You can turn the key on and run the shifter through the gears while spraying the cleaner down into the moving parts.

Quote from instructions:

"Stand astride the center console. Grasp the gear selector lever knob with both hands. Pull it straight upwards with a hard jerk."

Be careful here, as it's absolutely possible to put your elbow through the windshield when the shift lever releases - I proved it!

Also the instructions say to pry the boot ring downward with a screwdriver to release it from the top of the lever. I believe you'll find that you can twist the ring around the lever about 90 degrees and it will unlock from the lever.
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Current rides: 2005 Volvo S80 2.5T, 2003 Volvo V70 2.4NA, 1973 Volvo 1800ES (getting ever closer to road worthiness)