Yes, this is the valve. Clean it out thoroughly with alcohol and a pipe cleaner. You need to clean it from top to bottom and thru the side which has a very small hole into the center.

It's very awkward to put the valve back, I found that inserting two sides in and the pressing from the center out ...

Lee,

You were right again! I check all connections, took the relay out and cleaned the contacts and hey presto the fan is working again.

Thanks Lee.

Adrian

Good news! It turned out to be the PCV valve as suggested. I removed the intake manifold and found that the dealer had indeed replaced the oil trap but the pipes were in poor condition and even had a wear hole that the dealer simply inserted a joiner rather than replace. As I has purchased the kit ...

Thanks Mike, I relented and took the car in to my volvo dealer who seemed to say the same thing and performed a "120 CPVO" which included an oil trap, hose, sealing ring and a couple of clamps. The parts totalled $89.73 (labor $319.90). The bad news is it did not fix the problem so they now claim it ...

My 1998 S70 T5 turbo recently had an event where a large volume of oil seems to have blown out from the oil fill cap which was in place and tight. (this occurred two days after an oil /filter change service). Billows of blue smoke then followed from the exhaust. The smoke has since reduced but still ...