I don’t have a definitive answer for you. I do agree with your line of thought. At 160k it is highly unlikely that the turbo would croak. I have never heard of a relatively modern Volvo turbo going bad. The 5 cylinder engines and turbos in those cars are usually bulletproof.
It is more likely to be the exhaust cam seal as you mentioned. If so, there should evidence of an external oil leak on the drivers side of the engine. On my 95 850 the driver side exhaust cam seals were very accessible. And the 2007 has essentially the same engine.
FWIW - Regarding the turbo oil return line…. I had a 2002 VW Passat 4 cylinder turbo. The turbo oil return line was the only turbo part I replaced in 242k. Relatively cheap too!
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Will I buy another Volvo??? We'll see....
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