It really comes down to the condition of the rest of the vehicle. Is it rusty? Is the loosy/goosy steering indicative of the need to adjust the preload on the steering box, or of more expensive problems?
Most importantly, do you like the car enough to live with it for a few more years?
Assuming the car is otherwise sound, I would opt for the repair, although at 98K miles with oil running through the exhaust system, I would wonder about the long-term health of the catalytic converter.
You would be hard pressed to find a better (non-Mercedes) car for the cost of your car as it stands, plus the cost of the needed repairs.