I've looked through the local junk yards and everything I can find appears to be adjusted out to the max, meaning to me that a re-seal is not going to be my answer. I agree that most of the wear should be between the gear and rack assy. It looks like when you adjust the box, the pinion gear is being moved to hopefully a new unused section on the gear face thereby reducing the play. Notice the pic of the pinion gear assy.appears to be wedged shaped.

(http://www.davidpetryk.net/Mercedes/Steering.htm)

I'm thinking this is to accomodate for anticipated wear and adjustment. After talking with a couple of independant shops they are telling me that the rebuilt boxes that they use for customers cars are all the same a very hit and miss process on getting a good rebuilt box. They have also told me that w123 boxes seem to wear faster as say opposed to a w126 box which to me appears at least from an outwardly appearance to be very similar. Maybe a higher internal movement ratio makes it wear faster? For me, replacing the pinion gear and rack assemblies seems to be the logical fix at this time unless some one here has a magic fix.

Thanks,