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The FAQ describes the valve replacement. Get an OEM Volvo heater valve: yes, they are much more expensive ($40 vs $15) but the quality is vastly better than aftermarket. Buy from Tasca or Borton Volvo.
How old was your old valve, btw?
And on the engine: IF the headgasket is shot, you will most likely notice by doing a coolant fluid exhaust gas check. Your local mechanic can do this very quickly and inexpensively: he tests for exhaust gases in the fluid. And watch your oil VERY carefully and frequently: if coolant should get into the oil, it will show up as a milky brown mix.
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