First, make sure you have the red lead in #3 on the diagnostic connector and are set to read % duty cycle, not frequency -- the frequency stays the same whatever the duty cycle is.
Next, you should get a fixed 50% duty cycle on startup with cold engine. This will change to some other number when the O2 sensor warms up in a couple minutes. Should have a fixed duty cycle with key on, engine off (O2 sensor doesn't affect this reading) of 60%, I think. May be different.
Duty cycle of 98% indicates seriously lean, I think.
Once you get a reading that "floats", adjust the mixture slowly to get close to 50%. You will press down some on the linkage when you engage the spring to turn the screw, so it will always go rich when you adjust, then return to the new setting after 15 sec or so. Don't get in a hurry, and don't turn the screw very much at a time. Wait after each adjustement until the reading changes and settles down, or you will do what I did and end up way rich or way lean when it does.
On the cheapo meter I bought, grounding the black lead causes the meter to read either 98.xx% duty cycle or 0, you must leave it free.
1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!