[email protected] : In addition to checking the fuses on the handsfree harness that connect up under the dash, I would also remove the amplifier from under the passenger seat (it's not that difficult to do, just make sure to slide the seat all the way back, first) and have a look at the relay for the handsfree harness that sits down in that well. Disconnect the relay and have a look inside the connector. I ran into an XC90 before where liquid had got in there and corroded/shorted the connections - whether that was from rain/snow, a spilled drink or what - I couldn't tell. Once the handsfree harness was replaced, that system worked fine.
AndyN : although the microphone may be bad, it may also just be that the microphone cable was damaged. Follow the microphone cable from its connection to the carkit harness and up to where it is mounted overhead. Loosen or remove the A-pillar trim and anything else (overhead console) that may be along the path. You want to get the cable loose and examine if it has been pinched or clamped or cut-through anywhere. I have come across installations where the microphone cable was routed behind a piece of trim and then gets pinched underneath a screw that holds the trim or console down - over time the connection is severed or shorted and the microphone can become useless. If that is the case, you may be able to continue to use the microphone you have, as long as you fix any issue in the cable. Or, of course, you can always then just decide to buy a replacement.
I have some new and used spare parts for these kits (microphones, control buttons, carkit harnesses, control units), and some of the Volvo handsfree harnesses (a handful for the XC90, in particular), too, if needed. Send me a PM if you have a need.