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2.5t 197 bhp version? Split piston liner most likely.
Had two that were such nice cruisy cars but both were already split, I just kept topping them up for a year before giving in. Then got an almost collector worthy C70 with same engine, and set about getting it sorted, but even with them going up in value a little bit, still wasn't worth the engineering work to repair.
Would just keep putting coolant in it, unless its an R version, chances are your not putting it under enough pressure to really get any worse*
*Not an expert, have just skirted along the edge of failure for about 50k in two of them.
Good work! I did a bumper swap on my V50 which was quite a pain but agree on satisfaction reward. Got a panel and light cluster that needs doing, wheels and some internal trim. Never thought about a donor. Did you go to a Volvo-specific breaker for the door?