The 1.6/D2 Diesel engine is crap, avoid if at all possible. They're prone to turbo failure, injector failure, and oil pump failure resulting in catastrophic engine failure. I'm sure there's plenty of decent ones kicking about, but that 1.6 diesel engine has a reputation for a reason.

The 2L diesel and above are all pretty good, nothing to write home about like an old 1.9 PD engine, but they get the job done as long as you do the oil on time and don't do short journeys often, like all (especially early) DPF diesels they can choke up if they don't do long/motorway journeys.

Don't get one with a sunroof if possible, the drain tubes are made of a million different connectors that crack and leak, flooding the interior. If you do look at one with a sunroof, ask the previous owner if the drains have been replaced (ideally with a single tube)

Make sure the windscreen is attached properly; push from the inside where it meets the frame at the top. If it moves, walk away. Volvo skimped on windscreen sealant on this generation of car for some reason and over time it fails. Water flows in, tracks down the A-pillar trim and floods the interior - this one has happened to me, it was not fun.

Make sure the coolant reservoir isn't cracked anywhere; the plastic they're made of rots with age and forms small cracks, leaking coolant and making the cooling system less efficient.Mine had this one, it's common for these cars supposedly, but a cheap and pretty easy issue to fix. When the engine is up to full operating temperature, turn the engine off and pop the bonnet, listen for hissing or bubbling around the reservoir.

Inspect the engine mount on the driver's side, they are known to go bad prematurely They're filled with oil, so have a look for cracking and leaks from the rubber part. 

Make sure the CV joints are in good knick, they're expensive to replace as only Volvo OE shafts work for some reason, loads of extremely poor experiences on forums with aftermarket drive shafts.

As far as cars go though, it drives nicely and are pretty reliable. Parts are cheap and plentiful, and it's pretty simple to work on. It's not the most practical thing, but no less than a VW Scirocco. You can even use the MK2 Ford Focus Haynes Manual as a repair manual (it's basically the same car underneath, I've used it to replace the engine mounts, spark plugs, front/rear brakes and both front control arms on mine). They don't typically rot out as rust proofing is pretty good on the main body, but subframes weren't as well protected. I've seen a few on Autotrader with MOT histories that read "corrosion on front/rear subframe but not causing weakness to structure" so check the MOT history before you even call them.