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My 1980 244 is no doubt set up like yours. the head pipe has the O2 Sensor up near the top - so it's inside the engine bay. The CAT - which is original and still works - as flanges on either side. There is that short pipe with a flange that runs from the rear of the CAT and connects to the first muffler - stock Starla/Wagner kit from there back.
That pipe between the CAT and the first muffler is not part of the Starla Kit, you have to buy it somewhere else. or have it made if you can't find it. It only was used for a few years on B21 engines with that short CAT. Later models had CATs with rear pipes as part of the Unit. If your pipe is solid use it again.
I've replaced the entire run from the header pipe on back - using new gaskets and bolts at the front and rear flanges on the CAT
If the flanges on the CAT are not rusted away so that the new bolts won't hold, just keep the CAT you have. If you don't have to pass any inspection, just hollow out the cat, wire brush the outside to clean it up.
if you want to dump the CAT then have the shop make you a short pipe with flanges on both ends....this was an optional part in the Volvo parts catlogue - but not available in the US.
This site has two very large PDFs --- for download - For Further Reference.
http://www.volvotips.com/index.php/240-260/volvo-240-260-parts-catalog/
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