My interpretation of that code is that based on the O2 sensor output signal the system is having to excessively and constantly adjust the gross mixture towards lean. It would not be an O2 sensor problem as the ECM must be receiving a valid bouncing signal from the O2 sensor. If that signal was not bouncing (ie always high , low or in the middle) you then would get an O2 sensor code.

When running slightly rich the plugs would not be wet, that happens on a no start with no spark.

I would guess at fuel pressure regulator or MAF sensor based on my experience with the older LH systems in 240 and 740 cars. I believe there is a mixture adjustment on the MAF but not sure.
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David Hunter