I got laid off last week, so I've had plenty of time to attack this for just a few hours a day now.Last Tuesday I pulled the airbox and battery, and all their mounting hardware, as well as my upper intercooler pipe. The air mass meter is jammed into the turbo inlet hose pretty good, and there's a bunch of wires and hoses that attach to that, and I can't really see back there to see how it's all hooked up, so I'm just leaving it there for now. But there are a few wires on the main harness that go over the top of the transmission that are still connected back there, and they're very hard to access. I got this far and was interrupted by a phone call and lunch.

I need to figure out if the transmission has to come back off the torque converter or if there's a typical access plate that will allow me to drop it straight down. It definitely won't come off sideways with the engine in the stock location:

I also cracked the axle bolts loose while the car is on the ground, thinking they were some of the 200 ft-lb mofos that some FWD cars have. They aren't. But one of them appears to be filled with CV joint grease. Not that I'm using these halfshafts anyway, but it was kind of unnerving, as I thought that bolt is supposed to be dry and have loctite on it. Turns out, the hole goes all the way through to the inside of the joint.
Got it up on jackstands Wednesday, but on the subframe. I had to figure out where else to put the stands, and I removed the air guide under the bumper which exposed the two front frame horns where the bumper mounts. So the car should hold up ok up there, with maybe two more under the body behind the motor for safety.
I started tearing everything down, and what's funny is that I just laid under the car for the longest time, just looking at stuff. I'm certainly not in a hurry to finish this thing, so I'm kind of savoring every bolt and nut.
I got the suspension torn down enough to get the halfshafts out and am prepped to drop the subframe. The control arms will stay on it when I drop it. This stuff really comes apart quick and easy:

This halfshaft came out easy, it's only held in by the bearing that's right inboard of the inner CV joint. As far as the end bolts go, they don't have gargantuan torque on them and the spline slid right out. The other halfshaft has some sort of snap ring that holds it in the transmission, and I can't for the life of me get it out. It doesn't have to come out, it will just make the drop a little more awkward.

Here's the hole it came out of, there's really lots of clearance back here once you remove a couple of things. The level of rust on the back of the engine bothers me though. I'm not sure what's up with that, there isn't rust anywhere else. It's like a battery exploded under there or something. But even the aluminum block and the galvanized coolant and oil tubes for the turbo are corroded a bit.

After that I just laid under there loosening bolts and removing little pieces. There's a torque bump stop bolted to the transmission that is like a motor mount but has a half inch of clearance, so that came out. And I pulled my new lower transmission torque restraint. I also drained the transmission fluid, although I expect the torque converter will still be full.
I think I'm going to actually be able to leave the steering rack in the car, it all unbolts from the subframe from the bottom.
Friday I built my engine hanger. It feels pretty darn solid to me, I hope you guys don't make fun of me for it. Basically I'm going to jack up the engine and then hook the chains on, then when I drop the subframe the engine will just hang there. It should work fine. From what I understand, the Volvo shops do it this way only they have an official engine hanger Volvo special tool number blah blah blah.

Next I did a half-baked homebrew short shifter. Most short shift kits lengthen the bottom half of the shift lever, but there's zero room to do that on this setup. So I figured six of one, half dozen of the other, and shortened the top rod an inch. It was a piece of cake.
Here's the stock shifter rod. The keyway keeps the knob from twisting and the groove holds the shifter down.

This collar snaps into the groove.

Like this:

Then the shifter snaps on to it, and the collar inside the shift boot snaps on to this, holding the fingers in so that it can't be removed unless you follow the order of assembly.

A little precision dremel work to lengthen the keyway an inch:

A little precision hacksaw work to shorten the shaft an inch:

Precision groove dremeling:

Presto. Short shifter. Test fit:

Now for installation! I did this today. I had my usual helper for this part (my 6 year old girl), I figured it was relatively clean and easy. She actually told me to wait so she could help me do something on the car last week. *sniff* She's helped on my last 3 projects.

Out with the old, in with the new!

Helper jamming the assembly in. Right after I snapped this I noticed the flange hanging up on the gas pedal. Heh. Push harder, kid!

Bam. Installed. Really a piece of cake.

And after final assembly. Nice stubby shifter. It feels pretty right, if it sucks I can actually just pin the sawed-off end of the shaft back on and move the little collar up to the original slot. Or, worst case, buy the shifter rod and swap it. It's easy to get to.

I discovered after I assembled everything that I ran the cables on the wrong side of the steering column in the engine bay, so I have to drop the steering rack after all, just far enough to flip the cables on to the other side. That I think will suck less than removing the entire console and shifter assembly, but even then it wouldn't be hard to do.
I'm ready to drop the subframe and auto trans tomorrow.