This is a relatively common issue if you've ever taken your door handle off for whatever reason or someone else has and you find afterwards that your key no longer locks/unlocks the door even though it turns.
I got a cheap endoscope that let me really see what was going on inside the door while fixing it. It makes it a lot easier to understand. If all you want is the endoscope video of it getting fixed skip to :50 in the video
Robert has a video of this as well (though without the endoscope) if you want any further explanation, just search youtube for "How to repair your drivers door to lock and unlock with the key, Volvo 850, S70, V70, etc. - VOTD"
For those wondering about the camera, it's under $40 on amazon, cheap but works pretty well! Battery only lasts about 10 minutes but if you keep the USB plugged in it can run while charging so indefinitely with a power source. https://www.amazon.com/gp/product/B01MYTHWK4/