I replaced a Mitsu turbo on my B230FT almost a year ago...similar problem with the O-ring but I generally have a couple spares on hand (ask me why!) plus when I bought the rebuilt turbo I picked up two O-rings from the dealer. It seems one or two is always nicked during installation. Nicked heck...they're torn or cut in half!

I put in the drain pipe after the turbo is bolted up to the manifold.

I don't worry about the exhaust pipe until last.

By the way, check the clamp on the downpipe where it's mounted/clamped to the transmission at one of the bell housing bolts. Volvo uses a special bolt..it's a stud of sorts...one end clamps the bell housing to the engine and the other sticks out a threaded rod that you put the clamp over and screw a nut onto. Chances are the clamp has rusted or vibrated/cracked and needs to be replaced. If you leave it unclamped it may vibrate and cause a rattle on acceleration that will have you scratching your head trying to find!!