I'm not sure I understand when you say that the water is coming out of the
'injection'.

If you are getting water from the injection port (hole) then you have a bad
head gasket or a cracked head.

There are several way that this water could eventually get into the oil in
the crank case.. If it gets into the cylinder, then it will leak by the
rings and into the crank case or if the head gasket is really bad, it could
run back through the oil drain back passage (as I mentioned previously).

I just looked at the shop manual and note that there is a copper sleeve
pressed into the head and the injector seats into this copper sleeve. There
is a O ring at the top and the lower end of the sleeve is "spread" by a
special tool when installed.

Is is possible that when the injector was removed that it was siezed to this
sleeve and in pulling it out, this sleeve was pulled loose??

The O ring at the top would then allow water to leak out, as you mention and
the disturbed metal to metal seal at the bottom would allow the leakage into
the cylinder.

You will see what I'm talking about if you look at Fig. 8 and 9 in the
workshop manual.

If this is your problem, then you will have to have the sleeve reseated by a
shop equipt with the special Volvo tool.

Good luck.

Steve
s/v Good Intentions