Okay, great! My local mechanic obviously doesn't have a clue what oil my old merc likes.. He told me to use the same oil for my differential so that is probably wrong too?

Yeah, my manual says to use ATF as well, but Roy (whunter on the forum here) recommended 75W85 gear oil- which unless you live in Australia or Japan is impossible to find. Had some help from my NAPA guy track down some info on it and found the next best thing-- 75W90 synthetic by Coastal. Found that the fluid in there was probably ATF (red in color and low in viscosity). With the change, I have noticed definite reduction in grinding, especially downshifting from 3 to 2. BTW, it is the same stuff I put in the rear diff. Alex

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"Frau Blue Car" 1980 240D think Frau Bluker, cue the horses, formerly known as "China" from JimmyL
"Gunther" 1982 300D.....Turbo!! A/C!! Sunroof!!
"Fraulein" 1975 240D----Donated to NPR

Redline MTL is probably the best oil for a syncro gearbox that origionally specified either motor oil or a GL-4 oil. Don't use a GL-5 oil in the tranny---too slippery for the syncros. Use the GL-5 oil in the diff.

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Ron Schroeder
'85 300 Turbo Diesel 2 tank WVO
'83 300 Turbo Diesel 2 tank WVO
Some former WVO vehicles since ~1980:
'83 Mercedes 240D
'80 Audi 4000D
'83 ISUZU Pup
'70 SAAB 99 with Kubota diesel
'76 Honda Civic with Kubota diesel
'86 Golf
Several diesel generators
All with 2 tank WVO conversion
LI NY

Its the worst oil if the syncros are worn. MTL will make it grind even worse than ATF or engine oil.

Redline D4 ATF is what needs to be used.