The thing is, Scott, that those M103 motors just don't go bad...well, they all need head work eventually, but the bottom end of those motors are known to last forever! Then again, if you overheat it, that could change things I suppose.
My wagon has 176k miles, and it runs as-new; my bro-in-law has an '88 too, and his has something like 250k miles on it-his runs perfect too.
I'm thinking what you really need is an experienced tech that can tell you what's up-we're all merely taking stabs at this in the dark.
As to the rear main, I had mine replaced 3 weeks ago, for the second time! It's not an unheard-of problem-I suggest if you do have this seal replaced, be advised that Mercedes has available an offset rear main seal, which means that the seal lip rides on a different place on the crankshaft (I think it's a 2mm offset).
"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