There was a discussion about M103 and M104 engines on this site several years ago, and I copied some of the replies from the moderators to my hard drive.
Here is a reply from Aaron:
As you all know, one of my cars in the stable is a '93 300E 2.8. I absolutely love it, and when I went looking for a 124 chassis car, I remembered the wonderfully smooth 104 motor in the limited run 300E 2.8. I have driven many an E320 and many a 300E with the 103 motor but when the final decision came, the 104 won hands down. Extremely smooth and certainly powerful. We just returned from a trip to Atlanta with the 2.8 and it ran like a top the entire way there and back. Right now, it's at 64,000 miles and no trouble to report. There's some slight seepage at the rear corner of the head, but that's normal, and everything else is cherry. In my opinion, the 2.8 motor was the best match for the 124 chassis (save the 500E).
Here is a reply from Benzmac:
I think that the 104 is one of the best engines. The wire harness will be replaced under a goodwill for 120k miles at our local dealer. The have done hundreds for us...As for the head gasket, yes, one in 3 will fail early, especially if the engine has ever been run at all hot or has not had coolant changes....
Other than that, they do not go through valve jobs or use oil, they have alot of power...
I think that the few problems that they had can be overcome and you get a great package.
Here is a reply from a technician named metricman:
Yes the m104 leaks oil from the cam cover and the head gasket. If the job is properly done (with the black MB sealer) they do not leak. All of the m103 engines leaked from the cam covers. I saw alot them being resealed at the 15,000 mile service.
The 103 also had valve seals problems. We did hundred's of them and it was not uncommon to have bad cams and rockers. I have not done any valve seals or even camshafts on any 104 engines. I have done a dozen cam/rockers on the new m112 and m113 engines.
Yes, a ton of 104 engine wiring harnesses have gone bad. They could be tough to diagnose because they would not always have the same symptoms.
Ah, but the benefits. As mentioned, the 104 has a nice power curve, and I love the nice smooth idle. I have always been disappointed with the way the 103, and all CIS cars, idle. It was a genuine pleasure to have a smooth idling 104 engine after so many years of less then desirable 103.
Yes, we have seen idle problems from coils (May Christie) in the early production, and plug insulator problems. But the electronic fuel injected 104, whether it be HFM or ME2.1 is without a doubt a great improvement over the time honored 103.
Yes the 103 is very reliable, but the 104 has my vote, hands down. When my 300DT turbo wears out, I will skip past the 103 and go to the 104.
2001 E430, Bourdeaux Red, Oyster interior.
1973 280SE 4.5, 170,000 miles. 568 Signal Red, Black MB Tex. "The Red Baron".