Thanks again for all of the great replys. The reason that I sent this in as a question for the experts on this forum before going to my mechanic is to get some opinions of what the problem could be. You have given me some great ones and I will be asking some questions when I take it in.
Everything considered, I sounds like a possible water pump problem to me. I'll let you know what they find.
BTW - about how long does a water pump last on a 1994 E320 engine?