I did our 91 300e cover several months ago and it was actually a pretty easy job. Here is a link to a posting regarding this: 103 Front Cover Seal
Be sure to follow the links as well. Good advice by Larry Bible and others.
Additonally, here is a group of suggestions (sorry, kinda of long) with advice I collected before doing it:
Replacing 124 Upper Cover Seal
It is no big deal to replace this seal by removing the upper cover if you know the key.
1. Get the recommended sealer from MB. It will let you slide the cover rearward without disturbing the lower U Seal gasket.
2. Put the cam seal in the cover on the bench, and then oil the seal. While sliding the cover rearward use your fingernail to see that the seal is starting over the shaft smoothly.
3. Push the cover rearward into place and bolt in place.
4. Gob the sealer in the lower rear corners, and of course, use it on the U Seal and rear sealing surface.
Nothing to it if you're using the right stuff.
Part number for this stuff? the manual seems to indicate one type of sealant for the corners and another part number for the metal to metal seal? Your suggestions is to place the sealer on all contact surfaces. so put the sealer on top of the rubber "U" gasket as well as in the corners and on the metal mating surfaces?
Is your leak at the top timing cover or the bottom timing cover? The top timing cover is no big deal as long as you use a "slick before cured" sealant on the bottom u-seal so that the cover while slide rearward into place without disturbing the u-seal.
The M103 has a ratcheting tensioner and is probably the most durable timing chain system on any of the MB's. However, the chain is cheap and since you will have the cover off for access, it wouldn't be a problem to roll in a new chain. If you do, remove the tensioner mechanism, it will require some odd size Allens. Once removed, push the plunger all the way out of the ratcheting mechanism, and reinsert from the back. If you do not take this tension off, you will break something.
I'm with Larry on this as far as the tendency for 103's to leak mainly from the front cover lip seal. My experience has been that the 103 rarely has a external oil leak from the head gasket itself. A failed head gasket on a 103 almost always is an internal leak from oil pressure into the cooling system, gives you the appealing "butterscotch in my coolant tank" effect.
On the actual repair, i have to disagree (if I understand his recommendation correctly) with the repair recommendation.
When reinstalling the lip seal (the U shaped seal Larry mentioned) only a thin film of oil is applied to the top of the lip seal. The ONLY sealant to use on this job is Loctite 5900, it's applied to the mating surface between the front cover and head (on the cover) and also prior to installing the lip seal a dab of 5900 is applied to the back of each side of the groove on the lower cover (the groove the lip seal squeezes into).
The 104's also leak from the front cover lip seal, but also from the right front corner of the head gasket (hard to tell between a front cover leak and a right front head gasket leak) and also the 104's will leak from the right rear corner of the head gasket. I've never seen a 104 mixing oil into the coolant like a 103 or a 102.
Knowing lots of M103/102 owners, and being an ex-M103/102 owner myself, I would comment that they have a lower incidence of head gasket failure than the M104 engine.
However, the front cover is quite failure prone. Follow Gilly's advice on that repair, and it'll last much longer than it did from the factory.
I've seen some M103 engines with leaking main seals, front and rear. On further inspection, found severly-overfilled crankcases.
Overall, I wouldn't characterize the M103 engine as a "leaker." Sure, they can, and do, but I think overall the 103 is pretty good.
The tool for the seal that Michael correctly told you that you don't need, is substituted for by using a fingernail around the seal as you push the upper timing cover rearward into place. You are seeing that the seal does not "fold".
The importance of following the tensioner instructions cannot be overstressed. If you do not, you can break something expensive because you will be putting it back together with tension. Push the ratcheting plunger all the way through after removing the tensioner assembly, then start it from the outside, don't push it any further than just starting it into place. Upon startup, oil pressure will ratchet it into place.
You can do it either way, but I left the injection system in place, rather than pulling it off with the head. It worked very well for me, I had to remove and replace a few of the manifold bolts from underneath, but it was no problem. It was preferable for me to prevent ruining some of the vacuum and electrical connections on the injection system.
Use the sealant that Michael mentioned on the upper timing cover. It is slick and allows you to push the timing cover rearward without disturbing the USeal below the cover.
A new cam seal should not leak unless:
1) It is not seated correctly.
2) The cam has worn the head (no bearings) surface down enough that the cam is lower and thus does not line up with the center of the seal. It would leak at the top.
I replaced a seal that I installed with another when I did not seat it correctly.
I also noticed that the cam was closer to the bottom of the seal than the top. But not enough that the top leaked.
I dug out the seal, cleaned the surface of the cover and inserted another seal. (oiled on the inside) I tapped it into place using a tack hammer until the seal was even with the surface of the cover. No leak now.
I just resealed the upper timing cover and replaced the cam seal on my '88 260E. I installed the seal in the cover first, but it was difficult lining up the cam seal and the timing cover on the studs and it is easy to damage the seal while installing the cover.
Mine turned out okay and the timing cover is as dry as a bone but if I had to do it again, I would install the seal after the cover is in place. Use a block of wood to drive it flush with the face of the timing cover. I also used some 600 grit sandpaper to smooth the end of the camshaft so it wouldn't cut the new seal (it was very sharp).