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Sounds like you need new brake pads , when the pads get worn it triggers the warning replace the brake pads reset the computer this should fix the noise and the warning lights.
CHECK ABS FUSE AND RELAY.THE AWD CONTROLED BY SPEED SENSORS ONE IN THE FRONT OUT PUT SHAFT SECOND SPEED SENSOR IN THE REAR OUT PUT SHAFT THIRD SPEED SENSOR IS VECHICLE SPEED SENSOR.BEST TO HAVE VECHICLE FIX AT A GARAGE OR DEALERSHIP YOU WILL NEED DIAGNOSTIC EQUIPMENT TO WORK ON IT.
Did they tell you why you need to replace the rotors? Sometimes you need to do this if you waited to long to change the brake pads and you have metal against mnetal and it warps the brake rotor. I would recommend going to get another company to look at the brakes to make sure that you are not being sold a bill of goods you don't need. I hope that this helps! I have the same car and have been driving Volvo's for years. Do you know when you changed out the front brakes last? That may help you some to know but if you do a lot of stop and go driving, you would need to change the brake pads more frequently. Usually the front brakes go sooner than the rear but I am not sure if this is true with awd. But this is my first awd too.
Have you checked your wheel bearings? When these go out you can get a harsh grinding noise. This sounds like that is what it might be. Does it happen when you are going fast/slow turning/going straight? I know you said it's inconsistent but the more info the better. However, if I had to bet, based on what you have already said, it's your wheel bearings. Let me know if you have further questions. Thanks for using FixYa!
AWD Light is caused by your Rear Wheel Hub(s) one or both are going bad. Dealer cost is $500.00 part at Auto Zone is $129.00. Not to difficult to replace if you are some what mechaniclly knowledgable
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