I don't have a fix for this, but I did try everything I could think of. I finally had to have the car towed in and it cost me $651 to replace the ignition switch assembly and rekey it). It's a rare problem and not easily fixed with ordinary tools. Also, your car has to be towed when it happens.

My car is a 2007 XC-70 with 60,000 miles. It is serviced regularly at a Volvo dealer. It is used lightly and about 5 days a week, on average. I was shocked when the ignition switch locked up, particularly since there was no reason to suspect any kind of problem. I stopped for gas and when I got back in the car, the ignition switch would not rotate past the first position.

There are some things you can try if this happens, which I got from my Volvo mechanic:

I tried my two other keys. ( I also made sure the keys still worked in the door)
I banged on the bottom of the steering column.
I removed the plastic housing and banged harder on the switch housing.
I sprayed it with air and I sprayed it with WD-40.
All to no avail !

There was no warning.
I only use on key and shows no abnormal wear.

Finally, I called a tow truck.

Note: The steering wheel and the transmission are locked at this point. The car is not going anywhere and I could not push it. There is no transmission lock release, like in my trusty 740 ! So, the tow truck had to load the car backwards and drag the front two wheels on to the loading deck.

NOTE: I always get a tow truck that can load the entire car, not just two wheels. AWD cars have to be towed this way or the transmission can be damaged.

I have never had a single problem or complaint with this car. This was my first failure and it was a big headache. I had to have it sent into the dealer (100 miles away) and waited a week for parts and repairs.