I am having an issue where the vehicle is not responding to manual mode at all.

The 'shifter blind' is probably torn. It's the plastic piece that covers the slot for the gear lever. There's a tiny magnet on the underside that goes over a sensor that tells the transmission to go into manual mode and will display the gear selected. Part is cheap at around $14 from online oem Volvo stores. Did the repair myself. If you're mechanically inclined, there is a write up on swedespeed.com.