I vote for checking the timing - turn the engine to TDC by the timing marks, make sure #1 is up on compression, check that the rotor is pointing to #1 - I am sure you know the drill.
You might also try cranking the engine and "tapping" the cold start valve with a 12V lead to give it a little fuel and see if it fires.
Is it possible that the return valve is stuck and thus allowing too much fuel to the cylinders?
Good luck and do keep us posted.
Falls Church VA
'66 200, '66 230SL, '96 SL500. Sold: '81 380SL, '86 300E, '72 250C, '95 C220, 3 '84 280SL's '90 420SEL, '72 280SE, '73 280C, '78 280SE, '70 280SL, '77 450SL, '85 380SL, '87 560SL, '85 380SL, '72 350SL, '96 S500 Coupe