Simpson 260, Geez that is old! Its input impedance is too low, you need a couple mega ohms, which most $20 DVMs have these days. And you will see the volts bounce around on one of those.
That O2 sensor is probably bad, and if you replace it your car will probably run the same. If you check the voltage with the O2 sensor connected to the ECU, which is just a fine way to do it, you may read about 0.5 volts, which the ECU puts there as a default if the O2 sensor is bad (probably an open circuit).
The car will run fine.
YOur biggest problem is getting the old sensor out of the Cat. After this many years it may just rip a hole in the case if you can grip it and apply enough force.
In which case you are in for a new converter.....
Been there, done that..
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93 245 Classic, M47, IPD, 91 245SE AW70, 89 745, M46, IPD, Dependents-00 S/V 40s