This brings back some difficult memories for me. A compression check will help define the problem and eliminate the prospect of bent rods and out of round cylinders if it is ok. Mine began to knock a little and smoke at idle, but ran great at other than idle, and always jumped to life starting. I presumed the oil consumption was just an indication the valve seals and guides had deteriorated at 162,000 miles. Was I surprised when I was told I had two bent rods and would need an engine rebuild or a new engine.
I am still irate over the design defect that Mercedes foisted on me and others with this car. By the way mine, with less than 10,000 miles since the rebuild is now burning oil again, which the dealer attributes to a turbocharger oil seal failure. Which, of course cannot be repaired, you have to replace the turbo at $1800.
This has been the absolute worst car I have ever owned. I am questioning my 30 year relationship with Mercedes as the time to turn in my wife's 1999 C230 Sport comes near (December). Maybe a VW CDI. Too bad the Passat is no longer available with the Diesel engine.
Good luck, Jim
1986 Euro 190E 2.3-16 (291,000 miles),
1998 E300D TurboDiesel, 231,000 miles -purchased with 45,000,
1988 300E 5-speed 252,000 miles,
1983 240D 4-speed, purchased w/136,000, now with 222,000 miles.
2009 ML320CDI Bluetec, 89,000 miles
1971 220D (250,000 miles plus, sold to father-in-law),
1975 240D (245,000 miles - died of body rot),
1991 350SD (176,560 miles, weakest Benz I have owned),
1999 C230 Sport (45,400 miles),
1982 240D (321,000 miles, put to sleep)