I'm also experiencing the same problem on occasion. However, the smell appears to be coming from the trunk instead of the engine. Stopped by my mechanic's garage the other day and mentioned the problem to him. He said there is a plastic piece that mounts between the trunk wall and the seat back that could be cracked. Said you just have to unscrew the trunk wall from the frame to get to it and see if that's the problem.
He said that if this is indeed the problem that it's not an expensive fix. If true, this will be the first inexpensive fix I've had in a long time. ha!
Will probably drop the car off to him in the next week or so and let him find the problem.
'85 500SL (Euro) - 186,000 w/a complete restoration and engine rebuild at 154,000
'95 C280 - 174,000