I have not owned, or even driven, either of these models but I can offer some general observations from a former Volvo ('91 940GLE wagon) owner. Bought it because the wife "always wanted a Volvo wagon." After driving it for a year she started to drive my '90 Acura Integra, leaving me stuck driving the Volvo POS (it left us stranded at least 4 times).
Compared to the five Mercedes I have owned, the Volvo had a floaty, boatlike ride, lots of power, very little road feel or directional stability, cheaper build quality, and it looked, well, old. The interior looked more like a Pontiac rather than a fine luxury car. I realize you are comparing a mid-line 98 Volvo with an entry level 91 Benz, but my 77 300D had a much nicer road feel than the 91 Volvo.
Can I suggest that you look at a 91 or 92 300E? We saw a 91 300E, w/82K miles, at a local car lot this weekend for $15K, and it looked very nice. Can't afford one yet, but there is hope
Happy shopping though; the S70 is probably a much nicer car than my 940 was (FWD vs RWD, turbo, etc.)
Robert W. Roe
1984 300SD 170K mi