"...Mechanic said that fuses were checked, and that fuel pressure was checked..."

So I'm going to assume that when he checked the pressure that it read zero PSI?

I would have first listened carefully when I turned the ignition on to see if I could hear the pump run for a couple seconds. If I didn't hear it run I would have connected a volt meter to the pink pump power wire at the disconnect located somewhere between the back seat and the tank. If it DIDN'T show 12V for a couple seconds when I turned the key on, then I would know the problem is somewhere forward of the disconnect, maybe a blown fuse, faulty relay, bad relay board, etc. If it DID show voltage, then I would know the problem lied somewhere between the disconnect and the pump, possibly the pump itself, however I would also be looking for corroded/broken wiring where it enters the sender. Or a bad ground.

"...The fuel gauge ceased to function..."

At this point I'm really starting to question the condition of the wiring in the vicinity of the sender unit.

Side note: 160,000-ish miles seems to be about the life expectancy of the original pumps in these cars. (In my 1990 740 it died at around 155,000.)

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Current rides: 2005 Volvo S80 2.5T, 2003 Volvo V70 2.4NA, 1973 Volvo 1800ES (getting ever closer to road worthiness)