Lots of late-model MB's have a "idle fall" thing happen when something engages and cause a momentary drain on the charging system. I'm not sure what it is, but that might be what you felt in the E420, and that's normal.
Many of the other things that are wrong will need to be attended to, especially the rust spot (!) on the trunk.
It sounds like this car has lead quite a hard life. I haven't seen many 1997 cars with that many "trim" problems. They usually result from ham-fisted owners and folks that let others drive their cars. I can't comment on the price, as a super clean 1997 E420 (MB dealer lot with extended warranty) sells for about $30K Canadian ($23K-USD) and a private sale out of warranty car sells for $25K (19K-USD) in my parts.
Invest $100 in a Pre-Purchase-Inspection and make sure there is not something terribly wrong with the car. Check out similar cars ofr a price comparision.
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