Alright everybody, here goes my LITTLE problem. This one is probably two separate but similar issues but tell me what you think.

Symptoms:
-When put in a gear, the car will not move however a nasty noise is heard from the PTU. (I don't know if it is called a PTU in a Volvo but I am talking about where the driveshaft and axles come out of the transmission, like a transfer case)
-Transmission allows you to shift in and out of all gears to include park. So not a shifter issue.
-After switching back into park after trying to reverse or go forward it makes a grinding noise then stops. I understand why it is doing this. It because the transmission is actually spinning like it should but not transferring the power to the wheels so you are unable to stop the spinning with the brakes so it grinds/clicks until it stops and goes into park.
-Also while in park it still allows the car to roll.

After getting the car home.
-Put the car up on jacks. When spinning the wheels with the car off while in neutral, no other wheels would move and neither would the drive shaft. However when turning the drive shaft by hand the front right tire would kind of spin whenever it wanted to.
-Once again while up on jacks and the car running in drive or reverse the drive shaft spins but neither the front or back wheels turn.

I believe I have to issues:
-First, what in the transmission/PTU/transfercase would keep both front axles from spinning?
-Second, is there a spider gear or something in the rear differential that could have sheared not allowing the transfer to the rear wheels?

Can any of this be fluid or electrical related?

Hopefully that was enough information and thank you in advance for any inputs you may have. And yes I know I have a problem so please don't just say, "That sucks" or "Your screwed" I just want it fixed without having to spend $3000. Thanks again

 

When the driveshaft is turning is the pinion shaft into the rear diff turning?
If you stop the rear wheels from turning does the drive shaft still turn?
If you stop the driveshaft from turning will the front wheels now turn? (all four wheels in the air of course. Careful doing all of this)

 

When the car is on all four jacks and put in drive or reverse none of the wheels turn. I have not attempted to stop the drive shaft while it is spinning.

I guess i am confused on the AWD system. So if someone can better explain it that would be awesome. I am just unsure which provides primary power? The front wheels or the rear wheels? If the front wheels then when do the rear wheels engage, or are they all suppose to share the responsibility?

 

Additional information that would probably have been very helpful. The day before the issue started i replaced both front axles. Short story, the driver's side axle wasn't fully seated and locked into the transmission so the rubber boots have enough force to pull it back enough to unmate with the splines.
So ultimately the problem is fixed. Just reseated the axle and made sure it was locked in place. Thank you all for looking and thanks ssicarman for your help.

 

You are right on the additional information.
With my questions I was trying to work thorugh to see if htere wer issues with the rear diff/axles. I was fairly certain that at least one wheel was no longer connected to anything. When you said that the RF would turn with the drive shaft I suspected the problem to be in the rear.

That said glad that you found and fixed the problem.