Try this unless a machinist can hive you something better
Bolt the muffler up with the one good bolt tight enough so t won't move too easily but loose enough so you can shift into the correct position.
Take a little fast dry spray paint and spray through the bolt hole in the muffler onto the flange.
Let the paint dry enough so you can mark it.
I would take something with a fine sharp point that so you can see exactly where you are going the mark the paint as close to the middle of the circle possible.
Pull the muffler and see if your happy with where the mark is in the circle, center punch and drill.
You could also try marking intersecting line with a scribe.
If your not happy with where you've marked the hole, touch it up with more paint and try again.
I would try to square the cylinder up on your drill press and drill the hole using the stop on the press. It helps a lot to get a hole in the right plane and stops over drilling the depth.