I'd put a motor in it. These are great cars when they run right, and clearly yours no longer is. My '92 300D started right up this am, and it was 20 degrees out (and I don't have a block heater, just new glow plugs); yours should too.
One benefit to having a new motor is that you get to break it in, and you get to run it on synthetic oil...with that combo you should get at least 400k out of the next motor!
"If everything seems under control, you're simply not going fast enough" --Mario Andretti
1995 E500 street car
1986 Porsche 944 Turbo S track car