You're right about the head gasket because the '98 has an entirely different engine, a V6 (I want to say M112, but I'm not 100%) as opposed to the inline 6 (M104). I have a '94 C280, and it does have a small leak on the head gasket which my mechanic is advising me to just live and monitor closely.

You mentioned the harmonic balancer already. The only other big problem I can remember reading about late 97-98 W202s is the transmission problem for the first year or year and a half for the 5 speed auto transmission (722.6). You might want to do some checking into this to be certain. Another area to pay attention to in general with the W202 is the lower control arm bushings, which seem to wear out prematurely. I don't believe this is specific to any model year, but I've had mine done two years ago, when the car only had 130,000 kms on it.

Jonathan