Volvo Repair: Volvo 240 DL 1987 - Steam from the engine, volvo 240 dl, yellow arrow

Question
I have an automatic 1987 Volvo 240 DL with less than 40,000 miles (it was my grandmother's).  I have only been driving the car for a month.  The car seems to work as well as I would expect it too with this few miles but old age.  However, after driving on the highway at 100+ km/hr for a short period of time (15 minutes or more), a light steam starts to rise from the hood.  It is not thick enough to notice unless the car is stopped.  I have opened the hood, and it appears to be coming from the left-side of the engine (if looking in from the front).  The engine seems to have some liquid on it; I assumed it was oil.  However, I've been checking my oil and it does not appear that I have a leak.  I suppose it could also be coolant, but I have not had any problems with the car overheating.  Furthermore, there is not an oil/coolant patch left on the pavement after parking.  The steam has a smell to it, but I do not know whether it is oil or coolant.
 Essentially, the car is working fine; aside from burning gas like a MACK truck, and a not so reliable stereo, this is really the only problem with it (yet).  If you could shed some light, I would most appreciate it.

Caleb Balloch

Answer
Hello Caleb,  Well first,'steam' is white and disapates fast.Coolant leaking from the water pump "by-pass pipe"it  runs from the back of the pump to the back of the cylinder head where it joins to the heater hose,Any where along that path coolant can leak and get on the hot exhaust.'Pin hole' size leaks will only leak under pressure.To check the smell,remove the coolant cap, sniff it and you can get an idea of that type odor.Remove the oil fill cap and do the same ,now you know what you're smelling.As far as the fuel use,be sure the 'over-drive is working.To do this,when you driving,45/50 kph press the button on the gear shift ,the yellow arrow should lite and the rpm's increase.If you still have the original radio that is the most likly cause of the sterio problems,They all either lost channels or were very touchy at the ON/OFF knob,upgrade,its the best remedy.Thank You and good hunting!  PKD