Volvo: Coolant cap cracked-Over heated-oil in cylinder #2 P0302 Blown head gasket?, blown head gasket, 1998 volvo v70

Question
My wife's car has been using coolant and we do know where its going to. No drops in the driveway so I figured she had a head gasket going. Well she has been filling the coolant with water when the light comes on but she must have forgot to last week and the car started to run hot when she stopped she noticed that the coolant cap had cracked and was bubbling over and out. The car does have white smoke but no sign of water in the oil... Car has no fluids running out the exhaust pipe either. After the problem with over heating the check engine light came on so I scanned it and I got codes P0300 and P0302. So I pulled all the wires and plugs and cylinder #2 had lots of oil in it and there was a little bit of oil on top of the engine under the plastic cover. Of course cylinder #2's plug was fouled and oiled up. I need to know what the problem is so I can get to fixing it ASAP. Do you think its a blown head gasket? Cracked head? seals? Im temporarily laid off from work right so I have time and would like to save the money in labor. I have two friends that are mechanic's who are willing to help here and there but I will be doing most of the work... If you think it is the head or head gasket how I go about removing the head? Does the engine need to be dropped to get the manifold off? Again my wife's car is a 1998 Volvo V70 XC70 Cross Country AWD wagon 5 cylinder 2.4 liter Turbo. Thanks in advance!!!

Answer
Joe,
You will not know what damage is done until the head is off. The gasket will have to be replaced and the maybe the head is warped and need milling. You can pull all the plugs to see if one is all clean from water in the cylinder. You can do a compression test and cylinder leakage test that may lead to a clue. Ok now there are some special tools that are used to hold the cams and lock the crank into position and ones that hold the top cover down as the bolts are pulled. I have heard that guys get by without the tools, but that is taking a chance.
The damage may not be visible so the compression and leakage test may help. Go into it and replace all you can. Bottle, cap, water pump, hoses and t/stat etc. Valve stem seals maybe a good time to replace also. Now if the head is warped badly you maybe able to get a reman head from the dealer. Or maybe a good condition used one from a salvage yard.
The head can be removed without dropping the engine. Some guys loose the turbo push it back and pull the head with the exhaust manifold attached. The intake removed.