clunks going over bumps are usually in the front suspension - you need to check strut mounts, sway bar end links, sway bar bushings to start. You didn't mention if there's any driveability issues (ie odd feel turning left or right) so I'd not suspect a control arm bushing. the older Gen1 S40s are prone to broken springs (I've replaced 3 of 4). If you don't think the sound is coming from the front end, I'd also check the exhaust system for a broken hanger. its also possible for a motor mount or transmission mount to thump, but those usually display with a change in power (on off the gas). Does it make the sound if you coast over a speed bumb or RR crossing etc?

 

Agree with above. The strut mount or top spring seat is the #1 issue that I have found that leads to clunking in the front end on FWD Volvos. The #2 is the stabilizer bar link.

In the brief video, your stabilizer bar links look shot and the drive axle boot also looks questionable. I'd remove and replace all if you are planning to keep the car a while. The parts are not that expensive.

 

Your axle and sway bar link do look to be toasted. At the very least, you need to get that axle fixed or replaced ASAP, and I wouldn't be at all surprised to find that the clunk is that sway bar link (if there's any play in it when you try to forcefully move it, it's shot).

FWIW, my just-purchased 130,000 mile '04 V50 has a bad boot on one axle and a little bit of a shock through the steering wheel on a sudden brake application. I decided to just replace both control arms (including bushings and ball joints), both axles, both struts and both strut mounts. I'm doing this rather than going through that list one piece at a time over the next 40,000 miles. This way, the car will essentially drive like a new one the entire time I own it (figure 2-3 years), and I get to enjoy the benefit of those new parts. About $500 total, plus the cost of an alignment when I'm done (probably overdue anyway).

 

That's a wise decision to replace all of the wear parts.

 

Good point about replacing all parts at once, Habby. If you already have the axle and strut out, replacing the end link and control arm is pretty easy since those parts are already off and you only pay for one alignment job. If you use OEM quality control arms, you're good to go for another 100K miles