The more recent Volvo AWD's use a Haldex Unit. On swedespeed.com there is a report of Haldex failures:
"The Haldex unit is shut down by the computer. A stored message in the computer says to replace the faulty temperature/pressure sensor in the AOC (active on-demand coupling)
There is a range of VIN's but it really is for all '05-'07 but can also be for '03-'04's
IMPORTANT:
There is a small boot that that can (and does) either get dislodged or clogged.
Many times my service manager says these just fall off, or get clogged with road crap and give a false reading that the AWD is overheating and shuts it down.
SNOW can be a leading cause of this.
My dealer says that at every service they now look at these and usually tie wrap it back on securely so it will not come off."
reported by JRL at