I'd suggest the OM617, turbo inline-5 cylinder. Its bulletproof and probably relatively cheap compared to other MB engines. Ask anybody on the forum about their attributes and you'll be more than pleased. I get about 26-28mpg in my 85 300SD and it cruises down the highway just fine with just enough grunt to get me anywhere.

Specs for the motor are similar to the engine your removing.

You would probably need a custom oil pan fabricated to fit this motor properly for your application. Removal of the ALDA would help with power/acceleration if your not too concerned about smoke and decreased mileage.

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1963 Ford F100 - Cummins Swap?
1985 Mercedes 300SD - 210K
1992 Ford Festiva - 92K
2001 Ninja 250 - 8K