My 2 Cents.
First things first - get the valves adjusted. You know once cylinder has low compression, you know someone blew air into the cylinder and could detect air leaking from one of the valve (I'm assuming they are a competent mechanic). The only reason this could be happening is because the valves are out of adjustment or you have a burnt exhaust valve (meaning the exhaust valve got too hot, cracked and is not longer sealing well). Anyway, by paying a competent Mercedes mechanic to adjust your valves for you, you have nothing to loose except around $75 if it doesn't solve your problem. You are looking at a lot more money than that to pay these other guys, so do that first. And keep in mind that a lot of things like this are caused by simple things - which is why I can't believe all these people are just telling you to replace your motor or do a major tear down. Sounds like they are incredibly shady people to me. Anyway, don't jump to conclusions, just get the valves adjusted and then check the obvious. For example: are there any kinks or anything about the exhaust that would be restricting airflow, how is the catalytic converter, are the plugs and wires new (and good quality), are you sure the wires are installed on the right plugs, have you replaced the fuel filter, have you replaced the PVC valve, is the EGR functioning, do you have proper fuel pressure, are all the electrical components funcitoning correctly, have you made sure all the electrical components have good, clean, rust free connection, etc. If your car has coolant temp sensors, or MAP sensors, etc, replace them, they can cause wierd problems. Inspect the entire wiring harness, at this age it is possible that the insulation has deteriorated and is causing a short somewhere, and also check to make sure there aren't any leaks in the intake manifold gaskets. Lots of things to check before you condemn the motor.
Forgive me if I have made reference to something your car might not have, I'm not a specialist on your particular model, but that is just the point - don't think "Its a Mercedes, it must be difficult and expensive to fix." Good luck, and get those valves adjusted.