ok, started pulling things apart, and came across two more not very encouraging observations.
1. #3 sparkplug looks like the piston rammed into it, it's all mangled up.
2. Upon removing thermostat housing I found a piece of metal about 1/4 inch in diameter. I suppose once I get the head off I should see the damage to the piston and hopefully where this metal peice came from. it looks like a sharred of piece of the block maybe.
if the piston was able to crush the spark plug, then this must mean the piston is coming up to high, so did the piston somehow break loose from whatever holds it down below the block?
Man this sucks, my shortlived time as a benz owner may soon be at an end....