There's a plug on the bottom drivers side of the radiator. You need an Allen key to undo it. Don't pull it out all the way, just loosen it and it'll drain. That's all the dealer does. Use volvo fluid or the blue Pentafrost fluid you can get at Napa
If you want to go the extra mile, the block drain is on the back of the motor right behind the water pump. Drain that too and you'll get almost all the old coolant out. Here's a photo, you'll have to jack the car up and lay on your back to find it I think.
The coolant drains are designed to be opened and closed without sealing the threads. And yeah mix the coolant with non tap water. I use the gallons of filtered purified stuff from the grocery store, less than a buck a gallon.