SMK - brown fluid just B4 torque converter. I would think this is either oil getting past the rear main seal of the engine or dirty transmission fluid.
You might be able to pull off the cracked overflow hose, pull up GENTLY on it so as to bring a little more your way, then trim off the damaged piece. This is all assuming the crack is at the VERY end that attaches to the overflow tank. I recently went thru this. This hose goes down thru the wheel-well area on my MB.
1991 300-SEL - Model 126
M103 - SOHC
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