Sounds like my Volvo!
Check for a voltage control relay -- I know this is not in the alternator, so I suspect that there is more to voltage control on some of these cars than just the internal regulator. I will check next time I get to stop in and yak with my parts supplier, but that may be a day or two.
Unless the alternator is also making noise, I'd go for a regulator, but $140 is decent for a rebuilt one -- I spent $110 to have used parts put in the one in my 220D this year -- solved my hard start problem.
Sounds like someone didn't use MB coolant if the rad was gone -- get some in there, or at least phosphate free orange stuff. The phosphate type corrosion inhibitors eat aluminum (heads and rads!). The GM stuff appears to make something very similar to sand from the silicates they used, avoid it. See the various threads on coolant, very informative!
1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!