I would go with your restore and polish in the first instance. AFAIK original Volvo paint on the 240 has no clear coat. However, heavily pigmented paint like blue and especially red are very prone to oxidisation. The "white" stuff could well just be oxidisation. This effect could well be happening on the hood as well, horizontal surfaces always the worse, but the hood usually gets a bit more love. Wagon roofs are hard work. After the first wash, consider going over it with a clay bar, or rather easier, one of the new clay mitts. This will give you a much smoother surface to work on. Try Meguiars Ultimate Compound to remove the oxidisation. A sponge applicator makes the job easier. Wax choice is down to you but apply several light coats over a couple of days. There are also sealers that can go over the wax if you wish.

If you have dollars to spare a mobile detailer will buff out the car, a good one will advise first if that will give you the result you want. A quick test with a bit of compound can also be done by yourself. Good Luck.