No it isn't illegal. Only if someone sells you one that has that distinction removed from the title by laundering it from another state.
On the most part, avoid a salvage like the plague. But, on the other hand, it doesn't take much of an accident to total an older Benz. Even a mid 90's MBZ since the parts are so expensive.
An example, my older 86' 190 got smacked in the front corner bumper and fender. The damage was $5000. But it only needed a new fender and bumper. I made a deal with the body guy and he did the work for $3,800, thus saving the insurance co. from salvaging a perfect car. But it could have been easily totaled.
If the car was really smacked, I mean hard, stay away from it. ALWAYS take it to a dealer and have it checked before you buy to get the scoop. If it was bad, you will never know what kind of junk they slammed into it to make it run or all the electrical to work. Suppose it seems to need an alignment? So you buy it and say what's the big deal? $100, right? Then you find it cannot be aligned because the suspension is smashed or the frame bent. Now you have a big piece of crap in your driveway.
But if it was fixed by a reputable company, has all the receipts, etc. the only person who will know it is salvage is you. I know several dealers who are driving mid 90's S600's that look and drive new but are salvages. Only they know: They saved a good $20,000.
Do you’re homework. A title check online, a check at the MBZ dealership and make sure it has all receipts for the work done to make it whole again. Don't be in a hurry. That salvage isn't going anywhere quick. If they don't have that, take a hike and find another.
1991 300E Sport-
(Black on Black, Chrome Lorinzers 18", blacked out windows, clear signal lenses, Brabus cam)
(Burgundy , on parchment, Silver AMG Monoblocks, 16", wife's)
(Silver on black, 20" Silver AMG Monoblocks)
2001 Brabus CL500
(Silver on dark lavender suede Brabus interior, 18" Brabus)