Ok, I figured out what is happening. I turned the muffler 180 degrees and the tailpipe fit without hitting the plastic. But the only problem is that the muffler does not align with the heat shield 100%. So, I suspect that the Volvo exhaust system is a better fit? When I installed it I was fairly sure that the previous muffler (OEM) was oriented toward the spring (but maybe not), but it aligned with the heat shield, that much I do remember. I always expect aftermarket stuff to go right in without hitch, but I'm finding that is not always the case.

Btw, I think it is extremely helpful when people take their time to give someone a pic when needed. I actually went and changed the muffler before I read your reply, but hopefully it can help someone else with the same problem. It was Sunday Morning when I posted the question and I had to take a trip that day, so I took a reasoned guess about it and flipped the muffler over on its back, and then it all fit up much better. That muffler orientation was one thing this site lacked info on and I find that what I don't know is always the most problematic. Sure wish there were more pics here. Anyway, I looked at a pic of an 88,740 GLE in the Haynes manual and I saw where they had the muffler placed in the middle of the spring and the gas tank, so, I figured that was how it went. I was really worried about the heat being too close to the tank, and had to find out for sure before I took a chance - just not worth guessing. Car repairs CAN be dangerous sometimes, you just never know.

Thank you Colin,
diyer