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If the distributor has a black shield around it, remove it and clean cap thoroughly. Shield is notorious for arcing. Check hal effect sensor. Pull fuel pump connection off fuel rail and have it run in 2 liter bottle when ignition is turned on. Should be steady stream. Check resistors by battery, corroded connections.
Just went through same issue last week. Plugs looked to be firing ok, but was arcing inside cap shield enough to keep it from starting!
www.stepbystepvolvo.com/Resources/Volvo%20No-Start.pdf
http://www.stepbystepvolvo.com/NoStart.html
This is free and only asks for donation if solves problems
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