just want to provide an update for future reference...

It was actually a straight forward DIY. I basically followed jobs 32-640(R&R pressure oil pump) and 32-645(replacement of pressure oil pump seal). For a 560SEL, I had to remove the ignition distributor, only because it gives more room to disconnect the suction hose from the pump. Likewise, the tension roller for the AC needs to be loosened quite a bit to get it out of the way.

This is what I did in the re-sealing process:
1. Marked pump housing and bearing cap for re-assembly reference.
2. removed 2 retaining screws from the bearing cap, and exposed the o-oring. In my case, this was the one that was causing the leak. It was hard and brittle.
3. Pushed out the camshaft making sure that the steel ring holding the pistons stays in place inside the housing ( there are 4 pistons that kept in place by a steel ring. The camshaft is one piece with a removable sleeve made of brass i believe.
4. The sealing ring is now exposed. Mine appears to be in good shape as I did not have any problem with fluid leaking into the engine. I replaced it anyway. The old sealing ring is already of the double lip type. I removed the sealing ring by tapping it out slowly and carefully from the front of the pump. The sealing ring comes out to the back ( ie engine side). The sealing ring looks like a valve stem seal...
5. At this point, I was ready to put in the new parts. I cleaned up all parts with carb cleaner, and made sure there are no worn parts particularly the camshaft and other related parts. The procedure says not to reseal if camshaft is worn out.
6. I did not have a mandrel, so I used a flat piece of metal bar to tap in the new double lip sealing ring, small diameter in first. Apply oil onto the sealing ring and Tapping in slowly and evenly.
7. Next on to the other side, pushed in the camshaft in a turning motion making sure that the camshaft coupling goes through the sealing ring properly.
8. Applied oil onto the O-Ring and positions it onto the housing groove.
9. Press the bearing cap onto the housing carefully making sure that the o-ring does not get out of the groove.
10. Re-install 2 screws and tighen evenly to spec 9 NM.
11. Position the paper gasket and I was ready to re-assemble the pump onto the engine....

During re-assembly, I also replaced the 2 sealing rings on the pressure hose to pump connection. I made sure that the pump engaged properly with the driver on the engine side. Re-installed the 4 screws and tightened to spec 11 Nm.

We will see how it holds up...so far no leak....