I hate recommending the "parts cannon", but it may be worth your while to replace the thermostat before trying to chase a camshaft position sensor or the timing issues. My suspicion is that the ECU is compensating for a failing or failed thermostat. No guarantees though!

A thermostat is relatively cheap (< $20). However, I avoid ebay, discount auto parts stores etc. as it is unlikely that they would offer an OEM (original equipment manufacturer) product which is important for this item in my opinion.

These guys are very supportive of the old Volvo hobby and offer factory and OEM parts. I am not affiliated with them other than being a customer.
https://www.fcpeuro.com/Volvo-parts/S40/Engine-Thermostat/?year=2000&m=20&e=2007