Hard to desribe without being there... but..

if the rotor is off, the cap is off, and everything else in place... have an assistant turn the car over. Preferably at night, but shouldn't be necessary. Do the points spark as they open and close? If so, that's good. Then they aren't grounding where the connection goes through the distributor body. If they don't spark, George is right on the money. If you don't have an assistant, you can perform the same test manually by using a non-conductive tool to manually open and close the points when the ignition is on. The distributor has to be in the right position such that the points are normally closed...

If you do have a spark in that situation, I'd be suspect of the rotor, or perhaps the cap. I've seen that happen with rotors, though not in a Volvo. But points ignitions are points ignitions, be it a Jaguar XK150 or a Volvo 1800es or a Ford Pinto...

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-Matt I ♥ my ♂