I did the water pump on my 300E 2.6 in about 5 hours and the parts (with new MBZ pump) were about $100. So if that's all your mechanic did, $900 is pretty pricey.
You might get a second or even a third opinion on the squeal. Sounds to me like it could be the belt adjustment since it started after changing your water pump.
Does your state require a smog certificate? If so, disconnecting the pump is illegal. If you really need to replace the pump, you might look around for a used one. Since it's smog related, I would encourage you to fix the problem correctly.
Experience is something you don't get until just after you need it.