On the 240D I just bought a $40 replacement foam pad online, has been holding up great, still looks new two years later.

On a turbo I would certainly use either the stock foil-covered blanket or some sort of blanket designed for use in a high-heat environment. I have seen more than a few Volvo turbos with the paint cooked off the hoods and no blanket under the hood. I hate foil under the hood personally, I would look for a different material, but I would certainly use one.
Larger supply houses for semi-trucks generally have a variety of reasonably priced insulating and heat-resistant blankets and foams and other toys.

__________________
1971 280 SEL
1981 Volvo 242Tic | 1980 Bertone Coupe