Re: Blown head gasket...need help please
It's possible that the head wasn't torqued properly. If the block is true and the head machined, you should be good to bolt it back together. I'd spend the extra couple bucks on a FelPro head gasket set, used them before without problems.
As said before, run a tap through all the head bolt holes, clean up the head bolts with a wire wheel or wire brush and dip the bolt threads in Permatex Aviation Sealant before assembly. After the firing it up (adjusting the valves and letting it run for 15-30 minutes to come up to temp thoroughly), shut it down and let it cool overnight, then go back and re-torque the head bolts.
If you're worried about the distributor module being out and advancing the timing too much, you can check the timing curve with an advance timing light. Run the engine at different RPM's (idle, 1000, 1500, 2000, 2500, 3000, 3500) and check each time to make sure the timing advance is right. I've done this myself, buy it's easiest with one person at the throttle adjusting RPM and another person checking the timing. You would need to know the Volvo 3.0 timing curve though....