I would suggest that the cam towers are damaged from lack of oil, or less likely the cam is damaged. This is the classic failure to the MB V8 cam from lack of oil in the tower bearings -- they are just aluminum, no "bearing" like an American cam, and the aluminum will gall when not lubed, reducing clearance until the key shears or the cam breaks.
Have a machine shop check the cam for straightness, and replace the cam towers. You may want to replace the cam, too, just to be on the safe side. Once one goes, the other isn't far behind, usually.
1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!