I second rg's post: head gasket. The syptoms you describe are identical to the symptoms I had which led to the replacement of the head gasket in my OM60x engine last Winter. Best of luck.

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Chris

'04 ML500 - 53k, Inspiration Edition, Desert Silver
'11 Audi A4 Avant - Brilliant Black
'87 300SDL sold
'99 C280 Sport sold
'85 190E 2.3 sold