When drilling out if enough still is sticking file it flat, center punch it, and using split point premium HSS drill bit drill as previous mentioned. The use a smaller bit to create a centering hole also helps. As for the off center you can use a cone shape carbide rotary file and cut back to re-center. Above all it takes time and lots of being patience.
You might wonder why I mention using premium drill bit well here in the States anyone is selling supposedly HSS bits. The problem is a lot them are of low quality and dull very quickly when used on any steel especially muffler bolts. Also most HSS bits should not be spun above 1500 rpm to prevent overheating them which will cause them to fail quickly.
It was mention using a screw/bolt extractor. My experience on old engines this doesn't usually work here as the remains are usually galled (fused) in place especially with muffler bolts. I have snap off extractors and had to drill them out using a carbide drill bit then either install helix coil or resize them.
The problem with re-tapping to same size is that remaining threads of the previous screw will fall out most times and you just end up stripping the hole. It is best just to install a helix coil if your planning on using that particular hole and save the time of not having to redo the work.
