Hi:
I probably would hold out for a 700 series. More power, some improvements. I would agree that this is a terrible engine for the average (lack of maintenance) gas car owner. What makes them blow up is not changing the Timing belts at the recommended intervals. All interferrance engines (Gas or diesel will do this). Mercedes diesels have a better record because they use a timing chain. Volvo Diesels also have some cooling system issues and don't seem to like Dino Oil. They also have few and far mechanics to help you out. You will probably have to work on it yourself. Once you get past these issues they are fine. They have been known to run into the high 200k's.
That said, I guess the question is: Do you want a super reliable, maintenece free, Non-interferrance Volvo Red Block, Or a maintenance intensive Volvo Diesel.
My 1983 760 Turbo Diesel has 194,000. Goes from NYC to Florida once every 3 months and get's 29 mpg on the road. It's a joy to drive and is still going strong. But I've gotten past it's quirks. I'd sell my Volvo red block before I got rid of it.
Word of advice; Check for excessive Blowby before you buy. You should see some but not alot. Excessive blowby on an engine with low mileage, like yours, is a sure sign of engine wear and low compression. The previous owner was probably a (Lack of maintenence) gas car owner.
Good Luck
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