Well, the W202 cars do have a little more pedal travel prior to brake engagement, but not as you have described.
I would immediately think about pads and fluid level, then other parts like the master cylinder. Having checked/replaced those items, I concur with the diagnosis relating to brake lines. I would guess that some moisture must have got into the system at some point, and perhaps caused some damage.
Recheck the master cylinder (another mechanic?) and if it's in the budget, replace the rubber brake hoses leading to the caliper. If you want BETTER feel than OE, buy steel "aeroquip" style hoses.
1998 C230 "Black Betty"