Faults:
The differential was worn - they all go after about 120,000 miles on these, so I had to get it reconditioned.
The prop shaft & rear sub frame bushes were gone, so it made a noise like driving over a dead body when you changed gear.
There was a oil leak onto the alternator, so that had to be replaced.
The interior fan made a noise like a coffee grinder, and eventually ground its last bean.
One of the glow plugs had failed, so the glow plug light would glow inanely at you after you'd started the car. It would still start on the button in -6 temperatures though.
General Comments:
Being a 92bhp 2.5 five cylinder, you'd think it'd have a bit of poke, but you'd be disappointed. It's definitely faster than any of the W123 Mercs, but it'll have you screaming the slogan from Vauxhall Corsa commercials on motorway inclines ("Come on!").
The fastest mine would go was indicated 115mph, which was probably about 104mph in real life.
Due to its, revolutionary at the time, 5 link rear suspension, it did handle pretty well for a big car. If you popped the clutch halfway around a round-a-bout in 2nd, it would merely gently under steer, which was very safe for such a large rwd car. Just boring. It was a bit boaty around the corners, but the ride quality was good.
The engines on these cars are faultless, aside from the glow plugs they run with out fail. There is an unofficial world record for a W123 Mercedes 240D engine that has done 2,300,000 miles.
An added bonus is that you can run these diesels on various other oils. Peanut oil is the 'optimax' of the alternative fuel world, but I generally ran mine on rapeseed as that is cheapest in this country.
You can also run them on WVO (waste vegetable oil) without doing much other than filter the burnt chips from it.
Fuel economy wasn't great, I found I had to clog it to get anywhere, thus it would return around 27mpg. If you don't mind having a funeral procession of at least 10 cars flashing, beeping and gesturing at you, then I think 40 mpg is possible.