Yes, the 290 will certainly more than handle that HP.
The thing you'll want to concern yourself will be replacing the Primary Drive Shaft bearings/seals in your Flywheel Cover if you have not done so previously. Don't wait for them to fail.
The steering issue can be address with the addition of the external hydraulic system much like for Mercruiser drives. Some adaptation will be required unless you can find a company that does kits for Volvo Penta. I'll bet they exist. The world ran w/ M/C on this High Performance stuff so there is much more offered for them.
Note: the upper unit "drive gear" bearings take the hardest load. If/when you pull this down for U joints, check and/or change/adjust the preload on these bearings as to have the correct rolling torque on them.
You can also add the Duo Prop (1.78:1 for your engine) to the Volvo Penta drive.... actually to any of them, unlike M/C.
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