I really hate to say it, but something very similar is happening to me....
In my case, It's definitely a bad head gasket.

You can supposedly buy a test kit at Napa for ~10$ that checks for combustion gases in your coolant.
How long after starting your car (from cold) does pressure appear in the upper radiator hose? If there's pressure appearing within a few minutes of starting, it's a bad sign. It'll be combustion gas pressurizing the coolant system.

Try adding pure antifreeze. My car initially had no white smoke because I was using nearly pure water after many aparent "overheats" while driving only a few miles. After adding antifreeze and burping the system, everything seemed fine - until I started it up later that day, it blew coolant out the reservoir, and started blowing white smoke (not with every engine pulse) out the tailpipe.

I sincerely hope it's NOT your head gasket, but I encourage you to get a test kit for exhaust gas in your coolant.

Best of Luck,
Will
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1990 740 Turbo, on its way to stock specs, maybe beyond

Oh, how I hate to be the bearer of bad news, but . . .

Similar thing happened to my car, 1991 745 turbo, summer of 2008. Wife left house, HCV cracked, and she pulled over and shut down within a mile of home. Told her to start it up, watch temp gauge and drive carefully home. It did not go into overheat. HCV was spewing steam/coolant. I let it cool off and removed the HCV and hoses and capped off the connections. Car seemed to run fine, but something was wrong, hard to put finger on. She started drinking coolant, a little at first, then more and more. There was also something else that was just not right, but hard to put a finger on. Slowly, over the course of a couple of weeks, she began to show signs of overheating, the temp gauge would creep higher and higher. One day she just fully overheated and that was it. Time for a new cylinder head.

Short version: She, like your car probably did, warped her head during the short episode of loosing coolant. Symptoms were the same - drinking coolant and starting to show signs of over heating. It will probably get worse and worse.

Take it to a reputable mechanic (oxymoron?) and have them take a look at it. If you catch it soon enough, you might be able to save the head that is on the engine. If it overheats again and warps more, it might wind up needing to be machined way beyond the Volvo specs, which I advise against. But the situation is not going to get any better if you keep driving it. And, I strongly doubt that the problem is your water pump or thermostat.
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Scott Cook - 1991 745T, 1986 Toyota Tercel (Don't laugh, it is reliable, faithful AND gets 41 mpg!)

Possible partially stuck thermostat?
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