Keleo exhaust systems are very cool items, and will give you a very unique sound when the engine is running.
By your pictures you do have the exhaust mounted correctly. The extra nipple on the bottom of the muffler is to allow fuel to drain out of the muffler when you fill it. When these are new they come with a short piece of fuel line has a plug in it. This plugs to the bottom nipple and is routed outside of the cowl. For normal use the plug is inserted in this small piece of line. But when you fuel the plane the plug is removed so that fuel can exit out of the muffler when you fill it. Otherwise the muffler will fill with fuel and make it difficult to start your engine, or cause hydo-lock.
To duplicate the part that ships with the muffler all you need is fuel line and a plug. plug the fuel line into the tap on the muffler and route it outside of your cowl. Then for normal flying insert the plug into the line. Remove the plug to fuel. If you don't have something you can make a plug out of you can order them Tower.
http://www3.towerhobbies.com/cgi-bin...XK138&P=ML
Hope this helps
Ken