Idle mixture in park/neutral versus in gear

[falconsprint]

1989 560SEL, 145,000 miles.

A few months back I set my idle mixture using a DMM. The duty cycle bounced around between 50% and 60% while the car was idling in park. I checked it yesterday and saw that the mixture was steady at exactly 50%. When I put the car in drive or reverse it would then bounce around again (between 50-60%). Once back in park it would go back to staying steady at 50%. My understanding is that a steady 50% reading is an indication that the ECU has detected a failure and is no longer attempting to adjust the mixture based on the O2 sensor.

Anybody have any ideas what might be going on? The reason I was testing this is that the exhaust of my car smells odd. I can't really describe the smell. Its not an eye burning too much gas smell or a oil burning smell. Its not consuming any oil and has had a recent valve job. Perhaps the smell is an indication that the catalytic convertor needs to be replaced?
~Dave