Loss of power and oil coming out of dipstick

[alschnertz]

I hate to sound like a broken record, but I really think you should check the camshaft timing.
Didn't the issue crop up after the timing belt replacement? Why not double check to rule it out? It doesn't cost anything to check.

My intention is not to beat up on your mechanic. It's just that you say he was an older guy who used to work on Volvos.
Well, I'm an older guy and have been wrenching on Volvos and Hondas (in the family) for the past 40 years. This is not an attempt to compare myself to a licensed mechanic, I'm just saying that maybe the guy didn't realize what's involved.

I didn't do my first whiteblock (slang for the engine in your S40) timing belt until 2-3 years ago. It was a whole different ballgame compared to older redblock Volvos.

[alschnertz]

I found this video helpful.
Though it doesn't do a good job showing the timing mark on the crankshaft.
http://volvospeed.com/volvo_repairs_how ... et-up.html

You should also realize that the timing mark on the crankshaft gear is not at TDC.

Here is a write-up that has a close up of the timing marks on the crankshaft gear. They're almost impossible to see!
http://www.happywrenching.com/volvo/850 ... ement.html