Yesterday I removed the bevel gear and learned that my welded collar sleeve had spun on the bevel gear input splines. In summary, the three tig welds had let go. They had held successfully for 62000 kilometres.
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A trip to the auto wreckers was fruitful and a excellent non-leaking angle gear was harvested from a low mileage (232000 km) 2002 XC 70. Note that the 2002 has a different length output flange and different flange diameter so I will have to order an '03 seal before installation and swap the flanges. I plan to change the fluid and install a drain plug also before installing the new angle gear and of course the seal and transferring my old flange onto the new gear. Meanwhile while I wait for parts I will run the car in FWD, without the angle gear or propshaft for a couple weeks.
I'm a little disappointed that my original welding project wasn't a permanent fix to the problem. I find it interesting that the welds held initially, only to fail 62000 kilometres down the road. I will run with a stock angle gear/ collar sleeve setup now but will endeavour to engineer a more robust solution to this problem in the future.