When I was in Germany I saw many W123's with the factory hitch, which is different from the receiver-style hitches we have here (my uncles 300SD did have an American-style receiver hitch though). Once in a while I would see them pulling small camper trailers. I'd think the torque the diesels have would be fine for towing but really steep hills would be painful. I never saw people driving diesel pickups in Europe - but here I see them every few minutes and usually they aren't towing anything.
If you have any doubt your 240D can tow, check out this fully-loaded 200D fintail
: