Hey thanks Chowpit, and sorry Amge55 if i'm getting this thread sidetracked on my problem.
Ok, headgasket replacement + valves (195k) on this '90 300 E, gonna be around $1200 or so, maybe more.
This light brown sludge is also leaking onto the ground, just behind the right front tire. (usually only after long drives) -- I have been replacing coolant as needed, and have had no overheating problems yet. (needle sits right at top of 80c reading as normal)
My question is, do I have a radiator leak too? Or is the sludge leak a symptom of the blown gasket as well...
Thanks guys, this forum rules =)