My 2006 Volvo XC90 2.5T engine froze up on me. Estimate $5,500 to replace. Should I do this or move forward 🤔? Used cars are high right now for sure.

 

Move Forward.. A 2006 is past its prime and may start having safety issues (Electrical, Brake Linings, Drive Train, etc).
You have to make the choice, but is may be putting money down a rat hole. Once they replace the engine, it will likely never run right again and you'll have a million new problems.