Switch sits directly on top of the engine like MBstars said just behind the thermostat housing. It is screwed into the engine and comes into contact with the antifreeze so please be careful when removing! When you pull the connector from it it should have either 2 prongs or just one, be sure to get the right one when purchasing (I think yours has 2 prongs). I don't know what the K8 relay looks like but you can probably trace the connector wire to it maybe MBstars can clarify that bit. You may also want to check the connection contacts to the clutch magnet, taking down the fan maybe neccessary.
88 230E (W124)