I was finally able to track down someone at Bilstein who could advise me on this. I was told that the Bilsteins I had installed were the correct ones for the car, but not for the Eibach springs. The Bilstein HD will not tolerate more than a one inch drop and that the Bilstein Sport was designed for lowering springs. They do not offer a Sport for the W126 chassis. Best bet would be to look into something like the Koni.

Oh well, third set of shocks on their way........

Thanks to everyone who shared their thoughts with me.