Yes, heard that also. The pinion wheel is hard to adjust right. Can you telleme more about:
-where to find the special socket, or maybe a MB parts number?
-where i can find 'how to overhaul a w116 differential' information?

Anyway: bought the diff, and opened it. Looks good on the inside, and its definately a limited slip and 2.65.
I'll order one new friction plate, and compare it with the ones that are in it, to know what state they are in.
Diff. (half axles) bearings look still almost like new.

So maybe i only put in new seals and a clean up, because the thing is covered in Las Vegas desert sand (guy told me that)