Check out this thread:
http://volvoforums.com/forum/showthread.php?t=22434
Hope its your Brake Pedal Sensor, other options look more expensive. My experience with local Volvo dealer is that they are way over-priced and tend to find the most expensive solution to any problem.
That led me to find this wonderful device - the "PPC Diagnostic System" which I bought over Christmas from ukobd link below. Be sure to note which models it will work for¬ work for; but it works fine for my 2004 S60; should work for any 01-07 S60.
http://www.ukobd.co.uk/component/vir...category_id=14
You can use this volvo scanner to read and clear
ALL codes, including transmission and SRS (airbag) codes. Manufacturers website has list of Volvo codes:
http://www.ppc-diagnostic.com/codes/
Note Volvo has many ECU's (computer modules) and their codes are like "ECM9400" where they indicate the particular ECU and # in the code. The "Pxxxx" is the legally-mandated OBD code, which may not map nicely to a specific problem.
When my SRS-airbag light was on, my dealer wanted minimum $200 just to read codes, then more $ to do anything about it, even though I knew it just needed to be reset after I repaired the turn-signal switch in the steering column. Taking exchange-rate into account, the scanner cost ~260.00 USD. They are in short supply in the US. It will clear codes, reset Service light, etc... but of course won't fix any hard failure... but at least you'll have a much better idea of where to look for the cause(s) of the problems.
PS- Oh, and have you ever had the automatic transmission fluid changed? Volvo says not required, but they just want to sell you a new one after it craps out from lack of maintenance, hopefully after warrantee period expires. You'll cry when you get that quote. My local dealer wanted ~$700.00 (yep, it starts with a seven) to change ATF. Dealer sells ATF for $16/quart (starts with q), and quoted using 16 quarts. I went to Toyota dealer down the street and got a case of Toyota T-IV (identical 3309 fluid) for $5.04/quart, used 12 quarts to completely flush/refill for $65.
I will cease rant-mode now...