Unfortunately, a w123 from the Northeast can still look great from 10 feet away, but be a complete loss underneath.
The good news? What you show us isn't looking good, but the outer sills (apart from the jacking points) are cosmetic, not structural in any way.
The bad news, however, is that usually once it's reached that point in the sills the floors are shot too.
You need to take a big breath then get under the car (eye protection is a good idea) and see if you have any floors left.
Even if it looks like it's there, take a flat screwdriver or chisel and start poking around. The rule is that you will have to cut a MINIMUM of four inches back from any SOFT metal you find, to properly repair rust.
On my w116 300 SD, when I took it in for the driver's floor to be done, I had two holes. One was about 8 inches by 2 inches; the other was 4 x 3 maybe. When I went back to check on progress, the shop had ended up replacing just about the entire driver's floor, to get away from the soft areas.
If you find floor rot, show us some pics.