After checking the steering coupler as Steve suggests, there should be one last item to check - the sub-frame mounts (every other MB has them, the 123 should too). I had a very solid 'clunk' in the front end, turned out to be the sub-mounts. After replacement the clunk is gone, nice quiet ride. My mounts were still intact, but aged to the point they flexed so much the inner steel cone was making contact with the attachment bolt (clunk), and had worn partially through one bolt.
'73 280SEL 4.5 (9/72)- RIP
Only 8,173 units built from 5/71 thru 11/72
'02 CLK320 Cabriolet - wifey's mid-life crisis
2012 VW Jetta Sportwagon TDI...at least its a diesel
Non illegitemae carborundum.