The muffler area for the 323 is very small, hard to find a turbo oval muffler that fits the factory area nicely.

The one I was looking for was popular a few years back used on many GM G-body's for custom applications.

Walker Dynomax Turbo Thrush.

Within that line they offer a few "mini" turbos.

The one you need is part # 17702

The specs are:

11" long
16" long overall (with outlet extensions)
7.75" wide
3.25" high
2" inlet & outlet
Center / offset (universal)

Summit Racing has them for $16.95 with FREE shipping.

That is the perfect sized muffler for a 86-89 323.