If they ground the valves and seats down a lot, you will lose compression. The only way of finding this out is to pull the head off - which isn't that hard to do. At the same time you can check for loose bolts, blown head gasket, etc.
Once the head is off you need to measure the thickness of the valve between the face and where the angle begins - check in your Volvo manual - there is a picture and dimensions. You also need to measure the distance from the head surface down to the valve face. Again, dimension in the Volvo book (think it is about 0.011").
If both these numbers are excessive, you will need new valves (ouch! - expensive) and may need the head re-surfaced again.
I would not remove the fuel injection pumps - a serious can of worms there in getting them re-set. Besides, they seem to last forever.
Injectors are another story - you really need someone who knows what they are doing. There is a company in my town with an EXCELLENT guy who only works on the fuel injectors. Very nice professional shop with all the tools. For a basic overhaul
- clean, re-set to factory specs - it is about $45 per injector. If they need new tips (about the only thing that really goes wrong) add $95 ($140 complete overhaul and new tip).
When the head is removed the injector tips can be seriously damaged if the head is just tossed on a work bench - the injector tips stick out past the face of the head. You need to put the head on a couple of pieces of wood to keep the injector tips from hitting anything and being damaged.
There is also a machine shop 60-miles away that I use that is EXCELLENT. For a very light valve and seat grind (clean up the seats) and skimming the head (took off 0.006") they charged $60 for all the work! They do all the warranty work for John Deere tractors in our area as well as other diesel
engines - land and marine
While the head is off, check the exhaust manifold. If the engine has been running rich (and with all the black smoke, yours has!) huge amounts of oily soot can build up inside the manifold and greatly reduce the size of the exhaust passage
. You'll need to clean it out - a yucky job - otherwise your upper RPM
range can be reduced.
Since you are changing oil
filters like there M&M's, you can buy Napa, Sierra or Fram filters that are less expensive that Volvo's and work just fine.