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the expansion tank cap should just unscrew- it'll be tight but it will undo - try pushing down slightly as you turn
I would use Volvo brand coolant. I've seen blue, red, green etc. But Volvo Coolant is a blueish color. (which is what I would recommend) Don't use Dex-cool use ethlyene glycol based coolant and you'll be fine.
There is a coolant level sensor in the bottom of the coolant reservoir. These sensors fail frequently and even though the level is fine, the sensor doesn't function properly cutting the indicator light on so it may only be that
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