Head gasket--87 300E
If your car had the head off at 100k and a valve job at the same time, I find it hard to believe that the head gasket would be leaking internally in just 35,000 miles.
Sometimes oil residue in the cooling system from a PREVIOUS head gasket leak will never "clean out." Before you spend all of that time and money to do a valve job on a car that basically just had one, you may want to consider replacing the coolant expansion tank, all of the coolant hoses and the thermostat. These things are simple to replace on your own, and should run you under $200.00. Then fill the system with fresh MB coolant and run your car for a few hundred miles. I would not be surprised if NONE of the oil residue returns!
Please let me know how it goes...