I believe your vehicle is equipped with a double-overhead cam engine - 24 valves - 4 per cyl. The engine is referred to as an M104. Mine is an M103 and while different, in regards to your situation, I believe they are similar enough for me to hopefully help.

Open the hood and stand in front of the vehicle.

The alternator should be on the LEFT side of the engine facing from the front. It's down below. Follow the serpentine belt.
You are likely loooking at the power steering pump which is on the RIGHT side looking at things from the front. Your alternator and H2O pump are on OPPOSITE sides. You do not need to remove/loosen the alternator.

Look in your owners manual. There's a layout for routing the serpentine belt. Within this diagram is a depection of where the various belt-driven components are. This should help your clarify where things are.

There's been alot said at this site about replacing H2O pumps on single-overhead cam - 12 valve - M103 engines. You may be able to use this to change out your H2O pump. Who knows. There may even be some info on changing an M104 H2O pump.

In my opinion, at least in the case of an M103 H2O pump, you need some special tools(Snap-On Flex tool-use search facility here to locate it's actual name) and a wide assortments of flexible extensions of various lengths and quality sockets. This is not an impossible task by any means, but it is work, especially the first time you do it.

Read everything you can find on the subject here, buy the proper MB repair manual for your car and take your time.