I had the same problem on my 1990 560 Sel, the load leveler reservoir was dry when I bought the car: I filled it, it worked fine, but kept losing fluid, and the car was smoking under the hood - just like a bad right valve cover gasket. Turns out it was the High-pressure (rubber) hydraulic line from the pump. On the 5.6 L engine, it runs behind the crank pulley, under the right exhaust manifold, and then up over the exhaust union at the right rear of the engine. Replacing this is a lot of work; if you don't have a lift, don't try this at home. -rha
BTW, also check the lo-pressure hose from the reservoir to the pump; it's probably shot too.