Robert (rspi on the board) rightly suggested that the electrical portion of the ignition switch could be the culprit.
When I removed the ignition switch for replacement, I noticed what appeared to be brownish oxidation on a few of the electrical connector pins. I took a cellphone photo. It appears below thanks to Matt's technical prowess. Not a great photo, but note the heavy oxidation on three of the switch contacts. For the terminally curious, the part has numbers molded in to the plastic next to each pin. The heavily oxidized pins were #15, #301 and the right-hand most pin of the pair labelled either #"15I" -- that's 15 capital i, or #"151." Difficult to tell exactly what the third one is designated, but I am banking on an alphanumeric combination. I have no idea what any of those numbers correspond to in a wiring schematic, but I'll take a wild guess -- directionals, headlights, and dash illumination.

I replaced the same part on my '98 V70 a few days before. When I removed that one, I noticed similar oxidation -- although much heavier -- but on one pin only. I cleaned up the switch from the '98 and used it as the replacement on the '99 figuring that the oxidation was the only reason the switch on the '99 was acting up. I'm holding onto the '99 switch and will clean it up as a spare.
I suspect that cleaning the oxidation off the switch will restore normal function so anyone who is considering swapping out a misbehaving switch (electrical portion only) for a brand new part might want to try cleaning the contacts on the existing switch first. That might save you a few bucks.
Finally, when I removed the bottom steering wheel cover on the '99, the plastic mounts that the screws go through to hold the cover to the steering column crumbled. I have formed plugs of JB Weld epoxy to make new mounts and will drill them for the screws once it sets. No problem with the mounts on the '98.






