I finally got around to replacing the sensor this weekend. It was quite a lot cheaper and easier than I expected. The sensor only cost $21.95 CDN. The sensor is a 3" plastic pipe that fits beneath the magnetic float.
Sensor removal and replacement doesn't even require tools. The only trick is to remove the coolant reservoir without damaging the delicate plastic tabs. Prying from above with a screwdriver opens the tab enough to lift out the reservoir.
The sensor pulls out of the bottom of the tank. Installation is the reverse.
The Volvo part is called "Level Guard". I found an amusing story where one fellow retrofit one to fit the 740/940 series.
http://brickboard.com/ARCHIVES/1999OCT/20052534.shtml
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