For years I was spooked by the various forum reports on the W140. I stuck with 124's. Then about 5 months ago I began searching for a '97 - '99 S320.
Luckily, I found one within 20 miles of me. Full dealer service records, 109K miles, Black Opal with Grey Leather, trunk CD Player. Like your prospective vehicle, it some major receipts. Head Gasket at around 70K, Blower motor regulator, new windshield, MAS sensor, and some other things. I think that by '97 wiring harness issues were resolved. Evaporator, could happen but that's not the end of the world.
I paid $11,700. Recommend a Pre-Purchase Inspection at a good MB indy.

I went back through all the 90,000 mile services even though there was a dealer receipt for them. I don't trust that all this was done. I changed a serpentine belt that looked like the original one. I had the lower control arm bushings replaced. I replaced the front shocks, just for the hell of it. Also replaced the front rotors and pads because the PO had them turned at a gas station shop. He knew he was trading the car. I put on new Bridgestone Turanzas and had them Road Force balanced.

I love the car. It put's the 124 to shame luxury wise. Heated seats, super quiet on the highway. The projector headlights aren't the equal of my 124 Euros, but they are pretty good. Check that the mirrors fold back and forth correctly.

This is a complex car, but powertrain wise it should be very reliable. Hard to beat the M104 for reliability and it is a super clean layout in that huge engine bay. In the '97-99 it's 228 HP and has the revised very simple belt-tensioner. Electric airpump. I did my own tranny service pretty much immediately. I really like the adaptive transmission. The seats are the most comfortable I have ever experienced. Love the climate control system. Love the Bose audio system! Paint quality is great, not a trace of the orange-peel that I have observed on some very new MB's. Not a hint of rust anywhere (it lived it's first 3 years in NJ).

So assuming the price isn't in the clouds, I would go for it.

Steve