This used to happen to 240's a lot. Rust attacks the spring perch and it folds down against the top of the tire. Seen it dozens of times. Around 1985 Volvo got smart and added a drain to the spring perch so they don't rust out. IPD sells a repair kit, you can also get it at your dealer. PRobably cheaper and easier to just get a complete strut from a junkyard. TAke the lower ball joint with it, cut the brake lines, and undo the 3 bolts on top and the tie rod end. (This is in the junkyard).
FOr your car, what you want to do is replace it without taking apart brake lines. They're notorious for being tough to bleed brakes on. So here's what oyu do. Cut the brackets on the strut where the brake lines mount. One small cut, preferably using a rotary cutoff wheel. Don't nick the brake line itself. Go slow. On the strut you just got, remove the old lines and make a neat cut in those brackets too. Bend one piece up, one piece down so the brake line slides out the side. DOn't unbolt the lines on your car. Do unbolt the line bracket from the body to give you more working length. You're going to pull the caliper off, and rotate it around the bottom of the strut a bit, then spread the lines carefully apart so the strut can exit between the brake lines. Kind of weird but it will save hours of screwing around with the brakes.
Install the new strut up from underneath, guide it between the lines and finally up to the fender where you get to fight with the bolts. They never want to line up right. This is definitely a 2-man job, but something you CAN do at home with normal tools. Get the car up as high as you can, to give yourself a lot of working room under the fenderwell.
Good luck!
--
Rob Bareiss, New London CT ::: 86 244DL, 87 244DL, 88 744GLE, 91 244: 808K total