I also have an 86 16 valve that did the same overheating thing. It overheated and blew a gash in the plastic part of the radiator. It is all fixed now. The culprit was a bad temp sensor on the water pump. It has a red base with a wire attached. This is the temp switch that turns on the engine fan clutch at 100 degrees C. I replaced this 15 dollar switch and low and behold, the fan comes on now at 100`C and shuts off the fan at about 80`C. Try the switch first.

I have another question, is there a switch that turns on the fan clutch at 80`C? I know from owning VW's in the past that by replacing the temp switch you start the cooling process earlier. Will this make the M-Benz motor work a little more efficiently?
Thanks, Joe