I read this differently from what other people have said.

Is your leak between the thermostat housing (metal tube) and the hose itself? Is the hose old, swollen, squishy, or otherwise not healthy? I'd replace the hose and thermostat. There is a drain on the engine block, exhaust side, that a 3/8" (I think) hose will fit over to help you drain the coolant. It won't get it all out, but it'll get about 2/3rds of it. You should probably replace the coolant too, unless it's relatively new.

Good luck!

If the leak is truly from the hose, first try tightening the clamp at that end. If the leak is from the joint between the cylinder head and the small aluminum housing that the hose connects to, you must remove that housing and replace the rubber seal. I have seen aftermarket seals turn to mush after a few years of use - inferior type of rubber was used. See if you can obtain the genuine Volvo part.

As others say, go gently when removing and fastening the 10mm nuts on the housing's skinny little studs. Soak with a good penetrating lube overnight. The housing only needs to be tightened gently to compress a new seal enough to be watertight, if you have cleaned up the surfaces which the seal contacts.

Yes, a new thermostat is a good idea. I prefer the Wahler 92C units, which is what was in the box when I got one at a Volvo dealer.
--
Bob: Son's XC70, daughter's 940, my 83 240, 89 745 (V8) and S90. Also '77 MGB and some old motorcycles

This is an easy job, but -- Use a small 10 mm rachet to remove, or place your hand right over the ratchet head while removing to limit the torque applied. The studs can break somewhat easily, and removing and replacing them is a headache you probably don't want to deal with. Use PB Blaster penetrating oil on the nuts before attempting removal.

It sounds like you have a leak at the thermostat housing where it attaches to the cylinder head.
There is a rubber O-ring that fits around the thermostat and is squeezed between the housing and the head when the two (10mm head) nuts are tightened.

You can get a new gasket (O-Ring) at a local parts store (I would recommend changing the thermostat too) .

To change it, simply remove the two 10 mm nuts and the housing will pop off and reveal the thermostat.

You will lose a small amount of coolant.
Clean the housing and head where the thermostat sits, place the new seal around the thermostat, and put it back together..

Note: The seal has a groove that fits over the flange on the thermostat. It's pretty self explanatory, but I have heard of people not installling the O-Ring correctly over the thermostat flange, and actually having a large leak.

There is no need for using sealant of any kind on the O-ring. Simply tighten the nuts completely and compress it. It doesn't compress much.

Hope this helps
steve

Thats the thermostat housing. A new one comes witha gasket. Do not strip the nuts or break the studs off use some penetrant first. Remove the housing after draining the coolant.Sand all the pitted surfaces and replace. When installing the new thermostat ensure that the air release valve on it in the upwards position.