TE and 4matic
As always, "less in more" ...for you to spend on goodies. With the top end rebuild, a good thing, and a history with the dealer, one would expect some kind of warranty still left. Some written statement regarding leaks of any kind would also be good. In so far as the car is at a MBZ dealer, the price seems in line. Factored into the price is some piece of mind that "the dealer is just a phone call away."
Seems to me that a full inspection and report from your MBZ shop would be a good way to make up your mind. Your mechanic will note the leaks. The 4matic's a more expensive car than a standard TE; consequently, potentially more expensive to repair. Prepare. Or do you really need full time AWD? At the speeds I travel 65 mph (ok 110+ when it's safe) in dry California, I didn't see the value. However, I would think that NOT having to put snow chains is worth a lot to some.
Anthracite/Grey MB Tex
205/55/16, 16x7.5 Lorinser 15-hole
'95 S-500 corners
50% tint all windows