The connection should be under the false wall in the passenger side footwell (good info for a 126, not sure on the 201). The sensor leads will pass through the tranny hump about 10 inches or so back from the front of the footwell. The dramatic drop in mileage is an indicator the O2 sensor has taken a vacation somewhere to the south.
Not sure if your sensor is a 2 lead, 3 lead or 4 lead unit. Those with more than 2 are heated units.
'73 280SEL 4.5 (9/72)- RIP
Only 8,173 units built from 5/71 thru 11/72
'02 CLK320 Cabriolet - wifey's mid-life crisis
2012 VW Jetta Sportwagon TDI...at least its a diesel
Non illegitemae carborundum.