My vote is for the 1997 E420.
In 1996 no V8 was offered, and 1997 was the only year this engine was offered in this chassis. This 4.2 liter M119 engine was also used in the W124 chassis 400E / E420 from 1992-1995, and in the W140 chassis 1992-1999 400SEL / S420.
This engine was also offered in a 5.0 liter version (though somewhat modified) in the legendary W124 chassis 1992-1995 500E / E500, from 1990-1999 in the R129 chassis 500SL / SL500, and in the W140 chassis 500SEL / S500 from 1992-1999.
1998 was the first year the new M112 / M113 V6 and V8 engines were sold. They have a single overhead cam instead of dual overhead cams like the M119, but have two sparkplugs per cylinder, and 3 valves per cylinder - one intake valve and two exhaust valves.
The early 1992-1995-ish M119's had trouble with cam oiler tubes and bad throttle actuators. Other than that, they have no issues with reliability or longevity.
The M112 and M113 V6 and V8's have trouble with crankshaft balancers. If you buy a 1998-1999 E320 or E430, you ought to get it replaced to the updated part.
Read this thread:
Crankshaft Balancer Failure! UPDATED
If you decide to go with an E320, the 1996-1997 E320's have an inline-6 M104 engine. The 1998-current E320's have a V6.
The V6's have problems with crankshaft balancers, and hopefully the updated part will solve the problem. Other than this, this engine doesn't appear to have any other systemic problems.
M104's had problems with the original head gaskets leaking oil, but after countless redesigns, the new head gasets apparently don't leak.
In the U.S. the M104 was last used in 1999 in the W140 chassis S320, while the V6 is still in production. This may or may not lead people away from the M104.