This is driving me crazy!!

1990 300e m103 160,000 miles California car.

Car runs smoothly, accelerates well and uses no oil (1qt every 4 or 5000 miles). When it gets a quart low, I usually change it. I always run premium gas (91 octane)

I get an intemittent, occasional slightly rough idle on cold start, but it will smooth out when I depress the accelerator and disappear when the car warms up.

2 months ago I received notice to take it to a test only station for its smog check. The day after I received the notice, the Check Engine Light came on. Fault code 17...O2 sensor signal. I replaced the 02 sensor (Bosch 13942) I didn't test the old one before changing because it had been almost 60,000 miles since the last change. It was due. I also replaced the plugs (Bosch HR9DC), the distributor cap and rotor (both Bosch). I reset the light and drove it for a day...no check engine light.

I took it for the smog test. During the smog test, the light came on again (grrr)...automatic fail. All gasses were within allowances, but the NOx was high, almost to the limit. I checked and replaced a bad EGR valve. It wouldn't hold vacuum.

Also checked all vacuum lines. All good. I reset the light. The next day, the light came on again.

Borrowed a friend's spare o2 sensor.

The check engine light came on again.

I Shorted the r16 resistor to retard the timing. This seemed to help, I went a full day with no light. So I went in to get the smog recheck.

It passed as follows:
15 mph
co2 14.7
O2 0.2
HC Max 105 Meas 50
CO Max 0.69 Meas 0.10
NO Max 757 Meas 344

25 mph
co2 15.0
O2 0.1
HC Max 80 Meas 32
CO Max .56 Meas .06
NO Max 696 Meas 245

On the way home from the smog test, the light came on again. At least it waited this time.

It will always come on if I'm sitting with the car idling for any significant length of time (10+ minutes). Other times, it pops on when I'm in stop and go traffic.

I need some help here, I don't know what to check next. Any direction will be appreciated.