Failed emissions - 190E 2.6

[bpaz_ph]

Hi guys,

I just purchased a 190E 2.6 which failed in CT emissions.
Limit Reading
HC 192 320
CO 0.62 7.74

Four things I plan to do but would like to know your opinion:
1. replace O2 sensor - Is there any way of checking this?
2. replace plugs - The car has H8DC's instead of H9DC's. Would this affect the reading?
3. air filter - I'll pitch this in just to be sure the engine's getting enough air. Lambda reading changed from 10.3V without filter to 6.5V with filter. Looks like a big jump. What do you think?
4. Oil change - Currently, oil isn't dirty but looks too thin. Also, cyllinder #2 is burning oil. I'm planning to use 20W50 synthetic to minimize oil leak.

Regards,

Ben
'88 190E 2.6