Check engine light usually means that the oxygen sensor system isn't working correctly. Could also be other things, I'm not really familiar with MB gas engines.
Check the condition of the idle valve hoses -- they are probably rock hard and leaking at both ends. They are cheap, but replacement is sort of a pain. This will cause rough running and intermitant mixture problems.
Sounds like you are going very lean when the engine goes into closed loop mode -- this is when the oxygen sensor starts to work.
I found most of the vacuum lines in the engine compartment were leaking on the 300TE I bought a couple years ago -- take a look. You can either buy the MB parts or just use standard vacuum line of the proper size. The really important ones are the ones that go to the ignition computer on the fender, behind the ABS system -- if you have leaks there, the computer won't generate the correct fuel ratio.
You may also need to adjust the fuel mixture at the fuel distributor -- if it is way off, it takes a while for the computer to get it correct.
The tuneup is expensive -- I spent $350 on cap, rotor, wires, and plugs, but the car ran MUCH better after.
1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!