$140 labor for the cat may be a good price it depends if they are welding new hangers on it or if it comes with hangers already. Its a crapshoot what the problem is, the exhaust leak would need fixing though I dont think they will pass the test with a leak regardless of where it is, but I dont know.

You should be able to start the car and crawl around next to the car on the ground to determine where the leak is. If you get the approx area you probably can then crawl underneath when its not running and look for excess corrosion. It probably also will leave a few drips of water where its leaking, this usually only happens the first couple minutes its running after that the water is burned off to fast.

 

When you find the exhaust leak, try to judge whether it blows exhaust onto the OUTSIDE of your oxygen sensor. The O2 sensor actually measures oxygen DIFFERENCE between inside & outside the pipe.

Exhaust blowing onto the outside of the sensor will throw off the measurement. Oil dripping onto the outside of the sensor. Other crud on the outside of the sensor...?