This can be cause by a couple of things on the XC90. Hit the top of the gear shift knob with your fist to make sure that it is set down onto the shift shaft. Over time it can work up so the knob detent rod will no longer make contact with the internal lever. Spilled soft drink will work onto the white square plastic lever in the above video making the lever works sticky and not move far enough to release the key lock cable going up to the ignition switch. The ignition switch tumblers will become worn and not let the key turn to "0". The only fix for a failing ignition switch tumblers is to replace it. If it is a failing ignition switch, remove the bottom plastic under the steering column, 3-25 Torx screws, gently tap the underside of the ign sw with a hammer while turning the key to get the key turned to "0" to remove it. This is a temp fix. It will happen again until you replace the ign switch. The dealer has to order a new ignition switch with your VIN to get it made to your key code.

 

See Search results for query: lock cylinder | SwedeSpeed - Volvo Performance Forum for example. I've replaced one ignition lock cylinder myself and had another one replaced by the dealer. Mine started out as a dragging key that got harder and harder to remove (graphite spray made things better for a bit), then the cylinder broke outright. If it's the cylinder itself and not worn key wafers, the "guillotine" used for the steering wheel lock can break and the pieces get stuck on the bottom. You can pry off the underside cover and take the piece(s) out, rendering you with a no steering wheel lock but a working cylinder. Few videos on that, I removed my pieces to get by before replacing the cylinder outright.

 

I think it is the rod and the white square bit in the video where I am having my problems. What should I lube it with - WD40, grease, graphite?
Thank you.

 

I think it is the rod and the white square bit in the video where I am having my problems. What should I lube it with - WD40, grease, graphite?
Thank you.

The main reason they get sticky is not so much a lack of lubrication but more so because of beverage spills. Notice that "white square bit" is directly below the cup holders.

I have fixed many by first spraying the area down with mild soap solution, blowing the parts dry with compressed air then follow with a quick shot of WD40 across the working parts.
Finish by drying any excess with a clean cloth to not attract dust.

 

A little silicone grease or lube would be fine I'm sure, I'll guess what was is in there originally is lithium (or some other white reason grease).

 

I had it happen that my shift knob came up the way yours is, and I couldn't shift or turn the key. The shift plunger must be all the way in it's properly assembled position for anything, including the key, to work. The little ring retainer for the boot is what actually locks the shift lever into the correct position. That little flimsy ring is in the $30 range,

9463323 - 1178178 Retainer. Automatic, Control, Shift | Volvo Parts Webstore, Oak Park IL

Genuine 1178178 Part # 9463323 - Retainer. Automatic, Control, Shift. Fits S60, S80, V70, V70 XC, XC90. Ships from Volvo Parts Webstore, Oak Park IL

www.volvopartswebstore.com

Mine let go when I was trying to leave a parking spot in an underground garage, and I couldn't shift to reverse to get out of the parking spot. Fortunately, the shifter was able to move between neutral and Drive, so I pushed it out of the spot and got it home. I couldn't get the key out until I was able to get the shifter to go into P.

 

I hit it with some white lithium grease and it seems to have helped. I have trailer attached and leaving it attached until Monday so not really driving it. If the white lithium fails, I'll update and provide the next steps I'm taking.

Thank you for help!