I'm a little skeptical about the starter test. It depends on where you had it tested and how they tested it. Possibly there are a few turns shorted in the wiring inside the starter (due to getting too hot) and now the starter spins when out of the car (no load condition), but will not actually develop enough power to turn over the car.
I think this has to be the focus of your effort, because it is much more unlikely that the engine chose this particular time to lock up.
Something else to check, just because it doesn't cost anything and is easy: Verify you have oil in the car - check the oil dipstick.
Also, go to EBay, get in the EBay Motors section, and do a search for "Mercedes Diesel Starter" in the parts category. There is a person in Largo FLA that is selling a starter each week for the later Turbo models. (I'm not sure but I don't think this fits your car.) You might get in touch with him and ask if he has any starters for your car. He always starts the auction at $25. I got one from him and it looks pretty good - and soon I'm going to have to put it in because the current one sometimes spins without engaging the engine.
Hope this helps.