Vincent,

If you search the archives, you'll find that the same thing happened to me. No amount of drilling will make a dent in a hardened extractor bit but I didn't try a diamond tip bit. I even tried to weld a rod to the pin but there wasn't enough material for a good weld.

If all you want to do is replace the head gasket, perhaps you can lift the head enough to clean it and fit a new gasket without removing the pin. That's how I did it on an M117. I cut one end of the part of the head gasket that goes over the timing chain cover so I could fit the head gasket around the chain and guide, then I put RTV at the cut joint.

FWIW, I don't think the bolt was cheap. I think you didn't use enough washers.

Sixto
91 300SE
81 300SD