Hello all, this is my first post here so please go easy on me! I'm having some problems with my Volvo that I'm hoping you guys can help me out with.

-I purchased a used 1998 S40 T4 last year from a dealer here in Australia.
-The car had 111,000kms on the clock and was in almost immaculate condition!
-The car was inspected by a certified Volvo mechanic the day after. He told me I had bought a fantastic Volvo!
-I had the timing belt changed in February 2015 at 120,000kms just as Volvo recommends.
-Car was problem free until about September 2015. Lambada Sensor light and DSA fault light would occasionally come on and the car would constantly reach temperatures of 110 degrees C while driving. being a car noob, I didn't think much of it at the time.
-Had the car serviced in October 2015, replaced bad RH engine mount, rear brake pads and windscreen wipers. Was told there was a minor oil leak but not sure where. Mechanic did an OBD scan and says the warning lights are due to the o2 sensor but says not to worry about it?
-Drove car fine until January 2016 when my coolant temp warning light came on. Pulled over immediately and had car towed to same mechanic.
-Bad thermostat. Replaced no problem.
-A few weeks later I notice the car starts to surge and idle at low revs causing it to stall occasionally.
-Take her back to the mechanic and ask him to find the problem + fix oil leak.
-Mechanic temporally fixes oil leak with sealant, tells me the proper fix will cost $800+. He also tells me the surging and stalling is the fuel injectors. He gave them a clean but told me to get them replaced if surging continues. Service took two days, cost me $750 and I feel like nothing has really been fixed. Feel pissed but due to my friendly nature I don't say anything.

This is where the current problem arises:

-A few days later I notice a strange squeaking noise coming from the timing side of the engine. Sounds like a roller coming loose? It's a very quiet, constant rolling squeak. Like and old screw being loosened?
-I tell myself it's nothing and probably just age.
-The surging and stalling continues!
-I decide to take her back in to get checked next week.
-Now yesterday while driving to work, I'm slowing at an intersection when I hear a very quiet smack or bang and the engine shuts off.
-I get her towed back home. I decide I've spent enough money fixing this car and decide to sell it.

Now, before I sell it I'd like to see if the problem with the car is simple and try fix it myself? I know this may be a bad idea, but it's either that or I'm selling it for scraps. I refuse to spend any more money on this car. As much as I love it, I think it's time to move on.

Before I open it up, does anyone have any idea what it may be or where I should look first? I plan on working on it on Sunday and will be able to post some pics.

Thanks everyone and sorry for the long post!

 

Noise near timing belt. Smack or bang sound, I'd look at the belt then.
Also the belt may have jumped, it would explain the idle and maybe it jumped again and your piston hit a valve this time.

 

Agree with DonVanhugenstein, check the timing belt. If it's slipped or broken you have bent some valves. Mine bent all 8 exhaust valves when my belt slipped. It's fixable if you know how to pull the head and replace the valves.

A compression check will tell the tale.