The E300 Diesel was introduced in 1995 with the old body style (124 I believe). It was the first diesel in a while to pass California emissions. In 1996 the E300 Diesel was brought back in the new body style (210). It continued through 1999 when it was dropped because of MB's restyling of the W210 chassis. In 1998 it received a turbo which added 40 more horsepower.
If you want to buy one, you will need to look hard.... I was looking for a 1999 in 1999 and had to settle for a low mileage 1997 because the car is not common - especially in CO (we only have 3 MB dealers)!!!