Mike, if you've got an original muffler and it's still in good shape, short of replacing that part and the associated piece of pipe, the only thing you can do is cut off the rusted "carboned" sections and attach new pipe of your choosing to the stubs. This reply will probably generate more frowns, but I think you really don't want to replace the whole thing and you want to get out of it inexpensively. Another option is to scrape off all the crud and paint the tips with hi temp flat black paint. Just a couple of thoughts.
1987 BMW 325