There are no brand new transmissions for this car. Volvo sells rebuilds as well, but they're fully rebuilt, all the parts replaced. It's a good rebuild.
I would not bother with a trans shop unless they replaced the valve body. The valve body is the culprit on many of these...and I have NO idea what this guy meant by "the Japanese transmission"...sure, it's built by Aisin (a Toyota division), but that's the only trans that comes in the XC...so it's "the Japanese" as opposed to???
A good rebuild could go that kind of distance, but it has to have the fluid changed with some regularity, a filter would be nice as well.
From your description, yours is toast...
2006 Corolla (kid's car - 108K, Conti Eco Contacts, Castrol Edge 5W30)
2005 MB S600 (63K, M1 0W40)
2002 V70-XC (165K, Nokian WR G2, Pennzoil Ultra 5W30)
2002 V70-T5 (143K, IPD bars, Bilsteins, Extreme Contact DWS, Mobil 1 5W40)
1992 MB 300E (Sportline - 123K, Nokian WR G2, Edge 5W40)
1990 4-Runner (V6, 4WD, mild lift - 239K, 31" BFG AT KO, Edge 10W30)
1932 Packard Sedan (straight 8, dual sidemount spares, original paint and interior, Shell Rotella 15W40)