Really, really got myself in a bind here...
 

Alright, so I'll be straight up, before about a year ago when I got found the beauty of the Volvo, I was not mechanically inclined in any fashion. After getting my 240 and starting to work on it myself, my skills have improved significantly, but I'm still not mechanic. I've changed my own alternator, power steering pump, ac compressor, odometer, re wired OD, ect, ect, but nothing too difficult or labor intensive, since most everything on this car is a piece of cake to work on. Recently, my room mates head gasket went out, and since he is flat broke he begged me too help him replace it. I warned him that I had no idea what I was doing and was taking a shot in the dark. Anyway, here is the issue at hand:

We started today taking everything apart, I took the manifolds off, removed the belts, removed the fan/shroud, and got the timing belt cover off. Everything was going very smoothly until it came to removing the timing belt itself. I believe I aligned the camshaft mark with the TDC mark, and prepared to relive the tension bolt. I was lubing the bolt up with WD-40 and said we should let it sit for awhile, but my roommate put a wrench with a breaker bar on it immediately and started pulling on it, but it stripped the bolt out really badly, then he went on to trying to "chip" off the bolt with a flat head screw driver and a hammer. Obviously, the bolt is completely destroyed now with no hope of ever coming off. To top it off, he tried to remove the timing belt anyway and ended up shredding it in the process. Since the timing belt came off, we went ahead and removed the head and tried removing the bolts on the cam shaft. These bolts were so utterly frozen that not even a double breaker bar could give us any hope to remove them. I told him that this was a horrible idea from the start and he should of taken it to a professional. To top it off, the spot that the thermostat goes in has a large hole broken out of it.

Is there any hope for this car at all? It would be a damn shame to junk it, because even though it is the really ugly piss-yellow, it is almost 100% rust free, which is unheard of in Iowa. How wise would it be for us to tackle a complete engine replacement with an engine from a junk yard? Any advice at all on removing the bolts on the cam shaft or figuring out a solution for the tension bolt on the timing belt would be greatly appreciated.

Go to the junkyard and get a new head. check it to make sure it is in spec. be carefull this time. oh, and don't let your buddy touch the wrench ;)

I'd take it to a machine shop-those guys can do miracles.

Junk yard part is 60 bucks max....strip it clean of everything "but the camshaft....you will need to adjust this if you mess with it.....i just leave it on with valve cover off, sensors and all.....they will charge you more with valve cover

Did you guys by any chance shoot video of this operation?

Oh man, we should of! Thanks for the advice, that is what we decided to do anyway. Only problem we are having right now is removing the bolts from the camshaft, but we'll get that figured out.