Replacing the rear main engine seal.
 

What all is required for this? I can't find it in the FSM (if someone knows the section Ill go look).

It is a rope seal cut in half. You'll have to remove the upper oil pan and lift up the crank to snake the other half in.

Is it something that I should to with the engine out? Or if it aint broke dont fix it?

If you are going to remove the upper oil pan, then you should replace at least the half that is on the pan. If you are going to replace the main and rod bearings, then it is a good time to do the other half of the seal under the crank. I would peek to see if it is leaking back there to determine if it is needed.

It would be very hard to do the top half with the engine in the car. Until recently, I thought it would be possible to replace the bottom half with the engine in the car but somebody posted that they couldn't get the upper oil pan off with the engine in place so perhaps it is not possible to replace the bottom half with the engine in the car either.
I wouldn't even consider doing it unless it was absolutely essential or the engine had to come out for other reasons.

Replacing the seal didn't take but a minute. I also did bearings, oil filter housing gasket, and opened the oil pump to check the bushings. It has too be on the stand as other have said.

Look at page 8 for installing the main bearing seal
Removed by request
To remove and install the upper rope type main bearing seal:
Sneaky Pete Oil Seal Remover / Installer Features: Removes & installs upper rear
main seals without dropping crankshaft. Includes everything needed

http://www.amazon.com/Sneaky-Pete-Seal-Remover-Installer/dp/B000X01ZJM

I used a similar product 1 time on a 235 chevy engine and it worked the 1 time I did it.

So upper oil pan still has to come off with this or?

You MUST pull the engine too get the upper oil pan off, which you need too do to get the crank out so the seal can be replaced. No "seal remover" needed.

winmutt's engine is already out. But this tool is said to allow one to get to remove the other half of the rope seal that is under the crank. I say "under" because the engine should be on the stand upside down with the upper oil pan off.

Gotcha, but there is a little "spike" that sticks up that keeps the seal from being pulled "around", must be lifted up. I dont think "Sneaky Peat" can deal with that. Anyway if the engine is out on the stand its not much trouble to look at the bearings and then re torque the caps.

Yes the oil pan will need to come off.
Also I think there must be an error in the "Sneaky Pete" add. The tool is to remove and install the upper rope type main bearing seal. Meaning the part of the seal that is I the engine block. The lower part of the seal in my case was in the lower rear main bearing cap and that was removed and installed in the normal manner.
To remove the upper one you use the corkscrew device and twist it into the roap seal and slowly pull it out. If it will not pull out easily loosen ther rear main bearing cap which will allow more play between the crank and the seal and pull it out.
Again I only used this one time back around 1974 on a 235 chevy PU truck engine. It worked for that application.
If this information is not deemed good for a Mercedes the info might be useful to other members with their other vehicles.

I think the the "under" part may be a typo error in the add as the tool is made for changing the seal with the eingine in the frame (which is the way I used it in the past).
Also the first web site I posted is a Free Factory Manual site so that someone could look and see how MB wants the job done. Page 8 of the pdf has the part about replacing the rear main seal.
Removed by request

The 2nd I posted was the "Sneaky Pete" add at Amazon.com.

Rear Main seal, Replacement
 

I have installed many a rear main seal, First the engine will have to either be pulled or raised enough for upper oil pan removal , you can do it on your back if you raise it enough for pan removal very messy job and somewhat difficult loosen the main caps and take a punch and tap the seal out from the upper grab it with a pair of needle noise plyers and pull it out, Now I would suggest that you put the seal in the oil pan first leave it flush, now take the remainder of your new seal an push it back into upper half leaving equal lengths on either side of about 1/16 that will crush down when you reinstall pan. the seal comes as one complete peice and you have to cut it, so make sure you don't cut it short, leave access for upper half. take you finger and put a little bit of oil on it to help it seat., now if your going to do all this I would check my main and rod bearings and roll in some new ones torque them and do one at a time then you will have a new lowere end and better oil presure, , the numbers on the bearings will give you the size you need. Good luck, Jerry, Master ASE certified Diesel Mechanic, ps if your doing it on your back wear some safety glasses to keep the oil out of your eyes, lol