Although Ive never had to replace an O2 sensor, it sounds like yours is bad and will need replacing (I believe the procedure you went though is essentially listed in the 700 faq). Theyre a bit expensive, but you should do it quickly or else you will also have to replace the catalytic converter =/. But hey, if you do destroy the exhaust system maybe you can use it as an excuse to get one of those nifty looking sport systems =)