For your sake I hope you find a decently priced used engine. Think about getting a rust bucket that runs well, and all the other spare parts that go with it. You'll be able to verify that the engine and transmission are good before you purchase, and then you'll have all kinds of spares, assuming you have a place to store it.

One possible cause of your engine's demise: that blue RTV. MB specifically prohibits it because it can clog the piston spray nozzles and seize the engine. Obviously you don't have a seized engine but something short of that.

__________________
Respectfully,
/s/
M. Dillon
'87 124.193 (300TD) "White Whale", ~392k miles, 3.5l IP fitted
'95 124.131 (E300) "Sapphire", 380k miles
'73 Balboa 20 "Sanctification"
Charleston SC