Mine is over 200k miles with no major issues. I've replaced motor mounts, upper radiator hose and the idle air control valve. Other than those, just routine maintenance/tuneups and 2 timing belt services (one performed by me).
They are slightly different than 01-04 models but nothing major. Regular oil changes at conservative intervals are crucial with the 1.9T just like all turbo engines. I've enjoyed the car. No, it's not as nice as the higher end Volvos but it has been dead reliable for us. The car is solid, handles well and is comfortable (albeit on the smaller side).
It does have quirks like most European cars...it will throw a check engine light at the drop of a hat and some electrical parts throw a hissy fit from time to time but never just totally break. I also had an airbag light pop up once which I ended up clearing by disconnecting, cleaning and reconnecting the connectors under the passenger side front seat (indy shop wanted to replace the SIPS airbag for an insane amount of money). I love the car but I also like to wrench on my own stuff so take that for what it's worth.
Our S40 is the wife's daily. She came from a 2001 Civic and likes the Volvo better. It's more comfortable, more powerful, has more features such as leather, heated seats, etc. and even while it's considered a "cheap interior" by some it's much nicer than most economy cars of that era that would be in the $2500 range today. The Volvo also feels much more robust from the sound the doors make when they close to cruising down the highway..it just feels like it's put together well. No interior squeaks or rattles to note (since replacing the motor mounts haha), still runs great and returns decent fuel mileage (30+ mpg highway). The parts I've had to replaced were sourced from FCP and the prices weren't nearly as bad as expected but expect some heartburn if you pay someone to work on it, especially a dealer.
With all that said I don't think that particular S40 is worth $2500, more like $2000 if everything checks out. Mine came with a folder full of dealership maintenance records when I bought it used 5 years ago (every oil change, tire rotation, coolant flush, timing belt change, etc.) which has most likely led to it's stellar reliability for us.
