First off, I would strongly advise you to keep your O2 sensor always plugged in when the engine is running. By unplugging it, you've just told the computer that the engine is running lean and it should richen the mixture to compensate (which will throw off your test).

As for what the wires do, an '86+ vehicle will have two wires together that supply power to the regulated heater in the O2 sensor. This should have 12 to 14 volts between the two wires and should not change. The '86 and later 240s use a heated O2 sensor (3-wires total, two for the heater and one for the signal), and the earlier ones just use an ordinary single wire sensor (non-heated). The inclusion of the heater keeps the sensor at a very specific temperature and give more stability to the signal. It also helps the sensor warm up faster when you've just started the car. Owners of the '86 to '88 vehicles can get by with using a single wire O2 sensor like the earlier cars if they are tight on cash, but the later vehicles of '89+ will illuminate a 'check engine' light if no load is detected on the heater wires.

The Green wire is the signal wire for the O2 sensor. To properly test this you will need to 'tap' the wire. With the car off, unplug the green wire and insert a piece of thin wire through the hole in the spade connector (assuming you have a Bosch sensor), and then plug the connector back together. If there is no hole through the spade connector, you'll have to push it into the female side of the connector and then force the male part in after it. Once you have a good electrical contact with the Green wire, run this new 'tap' to the + terminal of your voltmeter and run a wire from the negative voltmeter terminal to the negative battery post (or a suitable ground if the battery post is corroded or in bad shape).

With the car running, you should see aproximately .45 to .60 on the volt meter for a good mixture. If it reads lower, then the engine is burning lean. If it reads higher, then it's burning rich.

Now, the tricky part. If the sensor is slowly dying, you won't know it until it's potential voltage output drops by more than .5 volts. Let me explain... As a Bosch O2 sensor dies, they will typically start reading about .1 volt or .2 volts low. When the engine is at proper mixture, the sensor sends a signal to the computer telling it that it's burning lean. The computer will richen the mixture to bring the voltage back up to .5 volts (the happy mixture point). Now the car is actually burning rich, but the sensor says that it's correct. To read about this situation in a brickboarders vehicle, read the following post:
http://www.brickboard.com/RWD/index.htm?id=618018&show_all=1

How do you know if your car is running rich due to a slowly dying sensor? The only way to be certain is to have a brand new O2 sensor right along side of it in the same exhaust stream and then compare voltages. This is why it's a good idea to change your O2 sensor every 3 to 5 years. The Bosch sensors were the OEM equipment and they seem to last the longest. I've had poor results with other manufacturers and they typically fail after about 2 years.

If you own a '86 to '88 vehicle and you need to replace the O2 sensor but can't afford the $150 for the proper 3-wire unit, check out the following webpage. You can do this with a later vehicle, but your 'check engine' light will be on all the time.
http://www.homestead.com/volvo2/O2sensor.html

God bless,
Fitz Fitzgerald.
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'87 Blue 245, NA 223K