I'm not sure but I don't think there was an 85 560SL, so double check what car it is.
I's double check also what you're saying about the TDC sensor (it is NOT a crank position sensor, it only senses TDC). It should be located on the front cover, not the flywheel on a 117. So causes for the timing being off, (besides an electronic fault) would include an incorrect front cover or harmonic balancer.
Of course one possiblity of a engine that runs worse as it warms up is a bad coil.
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