Glad to hear that you're looking at a '97. I just bought a '97 E420 last week and so far I am blown away by the car. It is such a fantastic ride. I drove it from Dallas to L.A. in one shot. 1450 miles and I AVERAGED 88 mph! This car is killer. Check out this thread.
My First Benz ('97 E420)!!!
As far as things to look for, here are a few things I picked up in my 6 months of looking.
1. Transmission fluid change; 1997 was the first year of the five speed. The transmission is 'sealed' and supposedly does not need servicing, but they are known to puke at around 100,000mi if not serviced. From what I gathered, 60K intervals seem standard. Look for this in the records.
2. The Driver's seats have a tendency to rattle. My doesn't. The fix is apparently costly because it requires replacement of the front seat rails.
3. Cracks in the dash are very common, especially around the defroster outlets and pass. SRS. Mine has a few that are unnoticeable.
4. Lower control arm bushings; if the car has anything but stock wheels these are known to crack and need replacement at least every 40-60k. Even with stock wheels, they go out frequently. The symptoms, I guess, are pulling to one side (that's what mine was doing).
5. Power Steering hose leakage; some owners have reported leaks probably owing to the fact that the V-8 produces a lot of heat.
6. Marker lights and brake lights need frequent replacement.
7. The M119 engine that this car has is apparently known for having bad 'oil crossover tubes.' These tubes have a weak point in them which can blow out and prevent oil from reaching the lifters. Listen for noisy lifters and/or tapping sounds from the top end. From what I understand it is a relatively easy fix involving removal of the valve cover. I will find out shortly because my E420 has this exact problem.
How many miles does this car have on it? I paid $17,500 for mine and it has 58,500k miles on it. Good luck! You are looking at a fantastic car!!