Just purchased a '99 S80 for $1000

Doesn't go past 55 mph
I can accelerate from stop and have barely any speed.
When I get up to around 40 mph i'm in the 3500 rpms
Also, after I start the engine, I cant put the vehicle into drive.

Any suggestions on what it could be?

ps....could it be the ETM????

 

Pull the engine codes first to see where it leads you.

 

I have the same issue too. My car is going to Volvo dealer this weekend for a recall on the ETM hoping it will fix the problem.

 

Sounds like you're stuck in "limp home mode." There could be many causes. Like Tech said, have the codes checked and go from there.