1985 300SD Brakes...some pointers perhaps?
 

My brother has a 1985 300SD and the brakes started acting up recently. It started with squishy brakes...we replaced the 2 front rotors and then bled the brakes...the fluid seemed rather watery. The car sat a long time before we bought it and started driving it regularily. The brake pedal seems hard now...and you really have to give it hell to make it stop at all. I think it may be an obstruction in the line...I had a beetle that gave a similar problem, it was a rusted flex line. Anyways, its undriveable cause it cant stop in an emergency. So what could it be? How could I condemn parts like master cylinders or boosters? What should I look for to find the problem.

What's the vacuum on the main vacuum line from the pump to the brake booster?

Flush it out, front and back lines, check the vacum pump, listen to Brian.

If the pedal is really hard to press than your brake booster is not doing its job. Usually because it is getting no vacuum. You didnt mention if you pulled your master cylinder, but if you did there is a gasket between it and the booster. put it on without the gasket and you lose your vacuum seal. Is the vacuum hose attached to the booster? Is there another vacuum line that got knocked off?

Sounds like your brake booster. You didn't feel it before because the lines were full of air and crap, making the pedal soft.