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I have a 1998 Volvo S70 Turbo - which I just gave to my son, after driving it for a few weeks there was a "knocking" sound in the engine, and the dealership said it needs a new engine at 120,000 kilometers - for a cost of $10,000.00 - they then added that perhaps it could just be bearing(s), but they would have to take out the engine to find out..blah blah blah!  just parked the car for now, to decide what to do next, the vehicle has had regular maintenance and we had just spent $2,400 on it a few weeks prior to this incident as they said it needed a new radiator.  Does this sound kosher? or do they just use me as a cash cow??  

The chances your whole engine needs replaced are slim.  But if they are hearing knocking  and they diagnosed it to mechanical knocking it could be posibble that there is enough damage to a cylinder that your short block (possilby) long block needs repleced.  

It sounds kind of shadey that they would come out and tell you that your whole engine needs to be replaced and then say well  umm maybe its just the bearings.  Depending on what bearings thet are they might feel the need to take out your engine.  Usualally rod journal bearings can be checked without ripping out the engine.  Main bearings however, it might be easier for them to get to them by taking out your engine but....  (I need conformation of this since i'm not one hundred percent positive) isnt there tests you can run to tell if your main bearings are shot without physically looking at them?  

They see you as a steak with a checkbook.

I'd take it to a few local shops to get estimates and second opinions.  A 'spun' bearing is a pretty recognizable sound to any competent mechanic.  The standard listed labor time to replace the crankshaft (same work as replacing the bearings) is 17.2 hours (x $45/hr = $772), so keep that in mind when you get your labor estimates.  Depending upon the damage, your crankshaft may need machining, which will add to the cost.

I hope they did alot more than replace the radiator for $2400.  A new one only costs around $350, and it takes less than 3 hours to replace it.