Who has Control
You are right - the number doe smean cubic inches.
The 0-320 is usually 140-160HP, whereas the 0-360 is 180HP.
Both are 4 cylinder - I am not expert, but I believe that the 0-360 is basically a longer stroke 0-320.
The 540, as others have pointed out, is the big 6 cylinder 235-300HP block that hangs off the front end of the PA28-235/6 and the PA32 range.
If your a/c is a Koliber, it is available with a larger 0-540 engine as an option - giving 235HP.
Perhaps this is the explanantion - my original query was that an 0-540 giving 160HP seemed VERY de-rated - and as there is a 260HP carb version, I wondered if you had done a typo - but apprently someone else had!!!!!
BTW, I am a Squadron member and fly the Pup with 69 on the nose ... we may have bumped intp each other at some stage.