1. On the only grey market euro I've inspected closely, the headlights, speedometer, and bumpers had been changed to federal. Those were the only obvious things. On yours it may be that the euro bumpers were left on, or that someone changed them back after the car was imported.

2. W=Made in Germany (actually West Germany at the time) DB=Daimler Benz 123123=123.123 chassis, in other words a 240D. For the next two I would have expected 10 for a manual or 12 for an automatic. I'm not sure what 1A is supposed to mean. The rest is just the sequential serial number.

3. Probably synchros. If you had grinding during all gear changes I'd suspect the clutch not releasing fully, but since it only happens on the 2-3, it's probably the 3rd gear synchros starting to go. If you're careful you can drive it like that for a long time. When you do decide to rebuild they aren't horrible.

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Whoever said there's nothing more expensive than a cheap Mercedes never had a cheap Jaguar.

83 300D Turbo with manual conversion, early W126 vented front rotors and H4 headlights 401,xxx miles
08 Suzuki GSX-R600 M4 Slip-on 26,xxx miles
88 Jaguar XJS V12 94,xxx miles. Work in progress.
99 Mazda Miata 183,xxx miles.