My car is a 1994 E320 (W124 with M104) with ~165k miles. The wiring harness and OVP have been replaced. The previous owner replaced the radiator.

I live in Phoenix and it is ~105 deg today. My temp gauge reads at or slightly above the mark above the 80C mark (I am not sure what temp it is because it is not labeled). The AC is used every day and will cause the temp gauge to creep up over that unlabeled mark.
I went to add some water wetter 2 weeks ago and found some tiny metal shavings in the bottom of the expansion tank. I did not see water dripping from the front of the motor but the expansion tank was low. I added water and the water wetter.

I was out over the weekend and when I got home and turned off the car the small hose on the expansion tank that connects to the hose to the thermostat housing blew off the expansion tank and the water shot out all over the garage floor. I reconnected the hose and decided to replace the thermostat. When I had the thermostat out, I saw tiny metal shavings in the thermostat housing - not many but the same type as in the expansion tank.

I tried to search for this on the forum but came up with many pages related to radiators, coolant, e320, even one about metal shavings but nothing quite the same as this in the time spent reading.

Where are the shavings coming from? I am guessing that it is the water pump? Can anyone shed some light on this problem? Where else does the water circulate that would pickup metal shavings?

I am sharing a car with my wife until I can get this fixed.

Thank you for any help,
Jim