the engine bay is surprisingly clean for that much mileage so I guess it has been well maintained.The hole in the block may suggest otherwise.... With regular services, these engines will do 500,000 miles with no major failures. I'd class a hole in the block as pretty major.
One more question, say it was the block, if I bought a new one from DMCH, would it be possible to put all the old parts onto the new block with DMUK 's help? (only the best ;)Yes but it'd be cheaper and easier to find a complete Volvo engine and transplant it. Plus "all the old parts" would result in a pretty poor engine if you put worn parts in a new block.