First my thought would be to do a compression test. If you have a cracked head, it would most likely show low compression on one or more of the cylinders.

You may also want to try removing the oil cap. If you hear or see puffing or a lot of blow-by, this could also be a clue to a cracked head or worn engine.

You could also change the injectors from one cylinder to another just to make sure that the injector is not at fault.

These car are aging and you may be better off just parting it out. I've rebuilt a Mercedes diesel engine (albeit a 240D) but once you open these up, they can cost a ton of money to sort.

The Tenor Man

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Currently Driving.....
1987 Mercedes Benz 300D Turbo - Daily Driver.
2004 Buick Rendezvous...Smaller than it looks!
2005 Mitsubishi Galant - Not bad for a tin box...Lousey Seats
Past Vehicles.....
1994 Dodge B-250 Van- GAS HOG..Succumbed to rust!
1989 Mercedes Benz 260E - Totaled but no one injured.
1977 Mercedes Benz 240D - Loved it, but SLOWWW! - Succumbed to RUST!
1976 Mercedes Benz 240D - Same as above! -
1975 Mercedes Benz 240D - Same as above!