I cannot tell from the manual picture exactly where the O2 sensor on a 1985 500 SEL is. Can someone describe it or send a picture?

 

on the pipe that comes off the manifold, along the frame. That is how I recall them. The connector wire goes through the frame and usually hooks up under the passenger's seat. At least, some of hte ones I know do that.
Usually, I see the six cylinders, so it might not be exactly the same. check the pipe down from the exhaust maniold. Failing htat, check near the front of the cat. I beleive the wiring will be under that seat, as the six cylinder is the same. They usually put a plastic cover on it.

 

on the pipe that comes off the manifold, along the frame. That is how I recall them. The connector wire goes through the frame and usually hooks up under the passenger's seat. At least, some of hte ones I know do that.
Usually, I see the six cylinders, so it might not be exactly the same. check the pipe down from the exhaust maniold. Failing htat, check near the front of the cat. I beleive the wiring will be under that seat, as the six cylinder is the same. They usually put a plastic cover on it.

 

While underneath the car look at the Catalyst. From there follow the exhaust pipe forward towards the manifold. You should see an item sticking up out of the exhaust pipe that looks like a bolt with a wire on it. It would probably be at the 10 O'Clock or the 2 O'Clock postion. When replacing it, be careful not to damage the connector. You may have to re-use it, as it is very hard to find an O2 Sensor for the W126 (117.963 engine). Most sold now days are universal type.

Hope this helps.