Cutting through all the myths about just what 240's and 740's came with what type of rear end and what Limited Slip or Locker differentials will actually fit these cars has been a long struggle.  The following information has been submitted and compiled by various experienced Volvonuts over the years and will hopefully help you in making the right decisions. 

If you have any additions or corrections, or if you can provide any photos that will help with these discussions, please email me. 
Thanks, Dave Barton.

Visual differences between a Volvo 1030 and 1031
Volvo 1030 Rear (single rib)	Volvo 1031 Rear (dual rib)
Above photos are from Anthony Hyde's Volvo Differential page

UPDATE NOTE: (04-08-02)
Derek Walker wrote in that while in the process of examining different options for an LSD for his '89 745 GLE (equipped with a 5.0L Ford engine and 4.10:1 differential), he checked with Reider Racing regarding the Truetrac per the recommendations here.  Reider responded that his 1031 Volvo housing would NOT accept the Truetrac LSD due to slight dimensional differences from the 1030 housing.  They had had a few returns from Volvo owners due to incompatibility issues.  It's not clear if the issues are unique with the Truetrac LSD or the 1031 housings.

Also it does seem all 1031's have the "ears" on the right side of the pumpkin (they are not machined on 240's).  These ears attach to the torque arm on the 740 suspension.  Justin's source for the info on the "ears" and the 1031 axle is Mike Knell at JagsThatRun.  Mike wrote the V8 engine swap book on the Volvo 240. 

From reading posts on 4x4 chat groups, the Truetrac sounds like a great LSD, especially for street performance.  The Dana Powr-Loc (which I'm pretty sure is the LSD Volvo offered for standard towing packages) is also supposed to be a good, long-lasting differential, although expensive.

Trutrac Internal Components

UPDATE NOTE: (12-08-02) 
Stealthfti  from the Turbobricks Forum wrote:
There are measurable differences between a 1030 and 1031 rear end housing.  A 1030 is about 10.125 inches from the rear cover mounting surface to the front of the pinion neck.  A 1031 is almost exactly 0.5 inches longer.

Visual differences:
A 1030 has a single gusset on each side of the pinion neck, roughly centered along the pinion centerline...
A 1031 has 2 gussets on each side; with the larger gusset spreading back from the top of the pinion neck; and the smaller gusset following the pinion centerline.  (Photos posted above)

UPDATE NOTE: (02-12-04): 
tuff240 from the Turbobricks Forum wrote:
The differential units are all the same up until they changed them for the speedo tone ring. The only difference between a 1030 and 1031 is the housing itself and the ring and pinion. The differential units can be swapped back and forth. The ring and pinion cannot.

The later model cars (86 and up), which all have speedo tone rings, are I believe all 1031's.  A Truetrac unit going in a car that requires a speedo tone ring will be different only to fit the tone ring.  You can still swap tone ring or no tone ring differentials from 1030 to 1031. The only problem will be that you won't have a working speedo if you need a tone ring and install a diff that does not one.

AGAIN, the major difference is the Ring and Pinion.   The differential units come in 2 sizes depending on what Ring and Pinion you have or want. One will fit 3:73 and up, one will fit below 3:73.  Make sure you pick accordingly in case you ever want to change gears.  For example, you cannot change from a 3:91 ing and pinion to a 3:31 ring and pinion without changing the differential unit. This goes for stock oem diffs and TrueTrac diffs as well.

*EDIT The pinion bearings are also different between a 1030 and 1031. So make sure you get the right pinion bearing for whatever rear end you have.

I abused a 1030 rear end with 200rwhp for about 15K miles with NO problems what so ever.  But keep in mind I have no personal experience with 700 series cars, just 200 series cars.

UPDATE NOTE:  (07-16-06)
-from Matt Dupuis

I installed a Truetrac in my 244 this winter, and would like to share some info on that.

Because my car is a V8, I chose to use a 3.31:1 gear ratio, so I ordered the low-preload diff for the 3.54:1 and down (PN 912A374).  I'm using a 1031 axle from an '86+ car, so it's got the tone ring and speedo drive (I had planned on using this with my Megasquirt for traction control at a later date).  At the same time, Dale Walmsley ordered a high-preload diff for the 3.73:1 and up (PN 912A411), for his 122 which we installed into a 240 1030 rear axle.

When I got my rear end apart, I thought to measure the carriers to see if I needed to buy any different shims.  To my surprise, I needed to add about 0.120" to the ring side of the carrier and subtract that from the other side!!!  Since the factory shims are about .060" each, that meant I'd have to machine material from the carrier to get it to fit.  Obviously this wasn't the right part for the car.

So I borrowed Dale's Truetrac and measured.  It was within .001" of my Volvo diff carrier, so I installed it using the original shims and new bearings, and the gear lash was even better than it was before I pulled the old one out.

Again, I used a 3.73 and up TrueTrac (p/n 411) with my 3.31 ring and pinion in my 1031, and all fit perfectly well.  I've also installed the same diff  into a 760 with a 3.73 and it fit just as well.

The taller gears (3.54 and down) have a larger diameter pinion to accomodate more teeth, so the ring gear must be moved further offset from centerline in order to keep the thickness of the ring gear consistent with shorter ratios.  Many manufacturers do this by moving the flange on the diff carrier outboard for the "highway" gears, but it seems that Volvo, in the 1031 at least, used a thinner ring gear instead, and kept the differential carrier the same for all ratios.  I can't speak for the 1030 model diff, since that's closer to a true Dana 30.  They might use thicker ring gears and offset flanges for the 3.54 and down (if they were ever delivered with those ratios).

Another thing that occurred that you should watch for.... the pickup for the speedo may drag on the Truetrac.  My 240 had a light drag, and I didn't bother doing anything about it, but the 760 I did had a HEAVY drag, so I had to clearance the sensor to clear the diff.

For the first tone ring car I installed a Truetrac diff into, I welded a speedo tone ring onto the diff.  It was a big pain. I had to cut the ring apart and weld it to the carrier, then grind down the welds, which were brittle from conduction hardening, so I had to braze the cracks.

Then I did a Truetrac install for Michael Towery.  I cut grooves with a die grinder and cutoff wheel.  It was so easy and worked so well that I only do it that way now.  The grooves need not be wide. The count just has to be the same. I think it's 12 grooves for the speedo.  I'm not sure of the count for ABS.  You can adjust the clearance by sliding the cover up or down, or by using a press in extreme cases.  I have done probably 8 of the Truetracs in total, and the ones for 3.73 gears also work for 3.31 in most cases. The PN 912A411 in the first pic is in a 3.73 geared 1031 axle (my son's car) and the PN 912A588 is in a 3.31 geared 1031 axle.  I also set up a few plate diffs and some locked (welded) for Rob's drift car. Maybe 12 Volvo axles total, not counting repair jobs.

Regarding differential part numbers... the Jeep front diff ("low preload", actually with a different hypoid angle) is a PN 912A314.  I have done plenty of these, but they slip in turns with a big rear sway.

I have my own company in Sweden www.bakaxel.se and I sell mostly parts for Volvo.  I sell rear axels and rebuilt BMW/ZF gearboxes to fit in Volvos and other parts.

If you wants ABS you can take the ring from the old differential and "move" it over to the Truetrac (PN912A588).  You need to put it in an machine to take away some steel to be able to get it "on" and move out the pickup for the speedometer 2-3 mm.  I have also made a CAD file and made a water cut metal "plate" that I wrapped around the Truetrac and then welded it together.