This sounds like a familiar Volvo problem:
Something may be blocking one of the passages by which oil gets up to the cam bearings; the result is that the camshaft seizes in its bearings and shears the Woodruff key. On Volvo B21 motors it's almost inevitable that the oil passage in the head will clog eventually if someone has not changed oil frequently enough or used low quality oil, but it's possible that, in your case, an incorrect or incorrectly installed gasket is blocking the oil flow. On M-B inline engines of that era (I've never worked on 4.5 V8), a misaligned cam bearing/stand (they must be replaced in matched sets) could also cause cam seizure, but that would surely have been detected on assembly by any competent mechanic. A warped head will cause misaligned cam bearings on many OHC engines -- if the head is planed back to flat, the cam bores must be align-bored oversize and an oversize cam fitted.
The Volvoes of that model, of course, have a non-interference motor with a timing belt, so when the cam seizes it just tears a few teeth off the belt at the crankshaft end and the car coasts to a stop with no further damage, but people often just replace and ruin a number of new belts before they finally realize that something else must be wrong.
Last edited by Fimum Fit; 10-21-2002 at 11:19 AM.