Well, I've got sum good and bad news.

Good news - I fixed the oil pump issue. There is one single bolt that holds the oil pump up to the bottom of the engine. This one bolt had sheared off somehow, and chunks of it were lying in the oil pan.
As you might imagine, this allowed the oil pump to drop a little bit, which did two things.
1) The key which turns the pump was barely in contact, and chewed up the end of the key. Thats not so bad, cuz with a little deburring it fit quite well back into the keyway.
2) The oil pump came to rest on the inside of the oil pan. This acted as a nice seal and prevented oil from entering the oil pump. Thus the low pressure.

Bad news - I have quite a bit of bearing shavings in the oil pan

So, I figured I would put it back together and have a listen.

It don't sound so good no more. Oil pressure is up though.

I've never torn into a mercedes engine - as far as rebuilding, does anyone know how difficult it can be as compared to american engines?

I know that to purchase a rebuilt engine is quite spendy.

I could always look for a donor car.

Anybody have any Ideas? I am really sad at this piont.