Hi ds960,
Must be the season to do timing belts! I just did mine yesterday and would be glad to answer any queries you may have. See my post on this earlier-there are a couple of gotchas you should know about. I think the job itself is not difficult but its worrying and more daunting compared to other more difficult jobs because of the consequences of getting it wrong.

If its any consolation, I couldn't find the timing mark on the lower pulley nor anything to line it up with even if I had found it! So, what I did was line up the marks on the camshaft sprockets with the indentations on the back of the plastic belt hosuing cover. Then, I got under the car and (looking at the cranskshft pulley from the left hand side) the lower part of the plastic belt cover housing comes really close to the pulley. So, I made a white mark on the pulley lining up with the part of the plastic belt housing cover and marked that too.

I also painted the belt before removal in 3 places: 2 up by the camshafts lining these up with marks I made on the sprockets' teeth and the rear of the timing cover housing and one below near the crankshaft. I also painted the engine block next to the paint on the belt down below where the crankshaft pulley is. Then I made the same marks on the new belt so when I fitted the new one, it fitted in the same place/way as the old one. You need to aim to make the paint marks on the new belt's teeth where the old marks were so you can put the new belt's teeth in exactly the same camshaft grooves between the sprocket teeth.
The important thing is that neither the camshafts or the crankshaft move relative to each other when the belt is off. And also, hard as it may be, hand crank the engine over after refitting the belt 2-3 times to make sure no valves touch the pistons. But if neither the camshaft nor the crankshaft move, and you put the teeth of the new belt in the same grooves in the sprockets where the old one came off, and you take up the slack in the right place, this will not happen. Let me know if you need more info while its still fresh in my mind. Cheers
Pete

http://www.threefattigers.com/Protocore/Volvo/TimingMarks.htm

I think this is the same engine
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'75 Jeep CJ5 345Hp ChevyPwrd, two motorcycles, '85 Pickup: The '89 Volvo is the newest vehicle I own. it wasn't Volvos safety , it was Longevity that sold me http://home.lyse.net/brox/TonyPage4.html

It's not as hard as you think...

As long as you do not rotate the crank while changing the belt, this method is a snap.

1) There are small indents on each of the camshaft sprockets...these point to the timing marks on the plastic cover.

2) See picture #69 of 72 on my head gasket repair...http://www.facebook.com/photo.php?pid=30092642&l=83c6eb9777&id=1008976850

3) Use a white or yellow paint pen to mark the camshaft sprockets and the cover, as shown in my photo.

4) ...now mark the crankshaft...everything is now in relative alignment. Do not move the camshafts or the crank...

5) Consult the 700/900 FAQ for installation.
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'01 V70 Wagon, 168K miles...'92 960 Wagon, 196K miles...'92 740 Turbo Wagon, 225K miles (sold)

The procedure is in the FAQ section. Note that this engine is NOT set with #1 at TDC as you (and others) have assumed. The crank timing mark is difficult to see, you must look down at the small pulley with good light at just the right angle. As you already know correct timing is critical, be sure to horse the engine over at least 2 revolutions rechecking the timing at the end. This will ensure there is no interference due to a mistake. Then and only then start the engine.

You will have the lower crank area fully visible to check out those white marks. I doubt that there would be any coolant leakage down there except from the water pump.
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David Hunter

I assume you've consulted the FAQ ? It has some words and pictures of advice.

The t-belt job is actually relatively easy because access is so good and you don't have to deal with all the extra belts and fan of the 4cylinder cars. The hard part is the consequence of failure.

Good Luck,
Will
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854 / 244 / Mini