So my 2005 V50 T5 M66 FWD developed transmission noise at around 140K miles. I had it to Volvo service and a local transmission shop to diagnose but neither could determine if it was the clutch kit or the transmission itself with out dropping the transmission at the cost of around $1200 just to diagnose. Both said it was not worth fixing. I fellow member here offered to do the job for a much more favorable rate. I ordered a Valeo SMF conversion clutch kit (which I highly recommend). We installed it only to find out that the problem was in the transmission itself.
I ordered a low mileage used transmission from a 2008 C30 to swap with mine.
In my old tranny, we found a bad shaft bearing and the differential had an assembly error. One of the spider gears had 2 bearing plates and the other had none. The one with 2 plates showed signs of excess heating as the plate was discolored blue.
Well we made a mistake of not making sure that the differential spider gears were in place for the drive shafts to enter the splines properly. We didn't realize this until the attempted test drive. Oops!. The spider gear was now jammed out of place and messed up one of the bearing plates. This resulted in having to drop the tranny again and disassemble to put the spider gear in place.
If anyone is interested I have photo-documentation of a disassembled M66 FWD transmission to share.
Bottom line, after getting past the aggravations, this was the most fun I've had with my car and now my V50 T5 M66 is running great again. I still can't explain the assembly error or the rather odd bearing anomaly. It does not fit a normal wear pattern as it looks more like pitting of the metal.
Some lessons learned:
When the axle shafts are removed, make sure the spider splines are aligned prior to reinstalling the shafts. Do not run the transmission with the axle shafts removed (ref S80 EV Conversion Blog).
The transmission is more easily removed by dropping the sub-frame. When reinstalling the sub-frame do not over torque the bolts. Torque to the Volvo spec. The subframe is supposed to have some give and over torquing can cause a stick-slip clunking in the suspension. If you want it stiffer, replace bushings with poly.
I highly recommend the Valeo SMF clutch conversion kit so far. It engages smoothly with no added noise and feels more positive.
I also recommend the Ford e-Focus torque mount. In tracking down my stick-slip clunk I changed the torque mount and love it. There is no added noise or vibration and it takes out the slop.

I ordered a low mileage used transmission from a 2008 C30 to swap with mine.

In my old tranny, we found a bad shaft bearing and the differential had an assembly error. One of the spider gears had 2 bearing plates and the other had none. The one with 2 plates showed signs of excess heating as the plate was discolored blue.


Well we made a mistake of not making sure that the differential spider gears were in place for the drive shafts to enter the splines properly. We didn't realize this until the attempted test drive. Oops!. The spider gear was now jammed out of place and messed up one of the bearing plates. This resulted in having to drop the tranny again and disassemble to put the spider gear in place.

If anyone is interested I have photo-documentation of a disassembled M66 FWD transmission to share.
Bottom line, after getting past the aggravations, this was the most fun I've had with my car and now my V50 T5 M66 is running great again. I still can't explain the assembly error or the rather odd bearing anomaly. It does not fit a normal wear pattern as it looks more like pitting of the metal.
Some lessons learned:
When the axle shafts are removed, make sure the spider splines are aligned prior to reinstalling the shafts. Do not run the transmission with the axle shafts removed (ref S80 EV Conversion Blog).
The transmission is more easily removed by dropping the sub-frame. When reinstalling the sub-frame do not over torque the bolts. Torque to the Volvo spec. The subframe is supposed to have some give and over torquing can cause a stick-slip clunking in the suspension. If you want it stiffer, replace bushings with poly.
I highly recommend the Valeo SMF clutch conversion kit so far. It engages smoothly with no added noise and feels more positive.
I also recommend the Ford e-Focus torque mount. In tracking down my stick-slip clunk I changed the torque mount and love it. There is no added noise or vibration and it takes out the slop.