I have the M9 bayo and want to hook it to my MOLLE gear. How does it work? From the pictures I am not sure how you hook a sheath to it. Will it work with the M9 sheath?

That little adapter is connected to two rows of PALS webbing (probably three or 4 cells wide).  This would cover about 3" of height.  The little 2" piece tacked on matches ALICE spec, so you connect your sheath to that.

Almost, but not quite. You're thinking of the ALICE adapters.

The Ka-Bar adapter was designed with a hook and loop fastener to let you slip it through the belt loop of a knife sheath.  You'd undo the Velcro (or whatever brand it is) on the flap and put it through the knife's sheath then refasten it.

For the M9, if you can, get a regular ALICE adapter.  It has the sewn on patch meant to be used with the M9 or ALICE clips.

This is the item you need,
secure.specialtydefense.com/cgi-bin/sds/4165.html

So what I am not seeing in that picture is a Velcro flap? That is what I wanted to know because you can't see how it works from the picture.

I think you are correct, for my M9 the alice adapter may work better. I don't have a lot of faith in velcro. That makes sense, it's 'loop' is the size of a belt to fit alice clips and the metal hanger on my M9 is made to fit a belt. Thanks.

Now, where to attach it......