Volvo: 2002 V70 (40k mi) needs new engine??, banjo bolt, low oil pressure

Question
Have done all sched. maint. since we bought the car new.  Probably didn't do oil changes as often as I should have, but estimate doing one between every pair of sched maint visits.  One year ago, got "low oil pressure" message; dealer replaced the turbo something and seal(s?).  Recently had same message come on; had car in for sched maint at same time and dealer recommended oil flush because oil looked dirty.  Immed after I got car back, had problem with brakes taking a couple seconds to grab.  Dealer said could be due to sludge in the engine and brakes not getting adequate reverse pressure at start up.  Dealer cleaned breather box and replaced banjo bolt.  20 miles later, my "oil can" light came on, and oil level barely registers on dip stick (maybe 1/8" on the very bottom).  Dealer says I probably need a new engine.  Does any of this sound possible on a car with just 40k miles?  In the last two weeks, I've spent $2200 and now it would be another $5000 for a new engine?  Plus $1000+ to do repairs to upper rear engine mount and rear stab. link that they said I need.  By the way, I was having no problems at all with the car before I took it in for the sched. maint.

Answer
Christie,
Lack of oil changes cause a variety of problems and possibly one that you are having. The only next best thing to do is get to a good Volvo shop for a second opinion. Most times when the engine gets slugged up it is more cost effective to replace the engine. The small passages in the head and block are almost impossible to clean without taking apart the engine using a hot tank to clean the slug. There is the possibility that the oil pick up seals have dried out and now the sump is sucking air passed the seal and not picking up the oil. However that would be a gamble of a few hundred dollars without any guaranty.
The brakes are another issue, it will need to be driven and tested. If you feel the repairs are not due to lack of oil and filter services you might try contacting Volvo of North America explain you problem and have a service rep meet you at your dealer.