This is a known problem with 98-2000 V70s and XCs. I've had to replace the motor and resitor to the tune of 600. SEveral other folks over on VolvoXC.com have also noted this repair. I'm not sure what the cause is but Volvo refuses to acknowledge a widespread issue with the Heat/AC fan. (Much like the ETM module problem).
I had the same issue with intermittent performance. Sometimes it would work for a week sometimes not for a week. You never knew when you started the car if it would work. There would be a short 6 second start and then it would die or run (you never knew). If it died, it would nto run now matter what postion you put the fan or other climate controls in. It would only start (maybe) if you turned off the engine and restarted.

When I took it to the dealer they found two fault codes for the fan and the power supply and replaced the two parts. It now works fine and is much quieter when it does work....I'm just out $600. Good luck...I hope yours can be fixed with a less drastic effort.