Choose a client application you want to run on the 128k. Determine the protocols it uses over the serial link. Plug the serial link cable into both your MacOSX and 128k box. Respond to those requests from the MacOSX box.
Now, what is the client app that talks over a serial port?
For example if it's "WibbleClient", find out what "WibbleProtocol" looks like and create a "WibbleServer" on the MacOSX box.
Don't bother with SheepShaver/Basilisk, they are not actually helping here.