SLS Leveling Valve on my 85 wagon.
 

When I move the lever on the leveling valve it does nothing and feels like there is no resistance at all. Obviously the self leveling part of my sls system is not working. Question is, is this something I could take care of with a rebuild kit with seems to be about 60 bucks, or should I just spend the extra 40 bucks and by a different reman unit that I see around the net for 100-120.

I tried twice to rebuild the SLS control valve on my 123 wagon, and failed both times. I ended up getting a great deal on a NOS OE valve for about $100 I think (over ten years ago now) and never looked back.

However, your problem is different. Have you checked that the SLS pump is putting out pressure? A complete lack of pressure from the pump could cause what you describe. The internals of the valve (nice pix in the FSM by the way) are NOT complicated, I don't understand how there could be no resistance unless (a) the internals have become somehow disconnected which is really hard to imagine or (b) the valve is not getting any pressure.

I'll have to look into closer. Not sure off top of head how to check if pump is actually working. Edit, I found the link http://www.peachparts.com/shopforum/diesel-discussion/271570-self-leveling-system-how-works-troubleshooting-system.html and it looks like I can simply check the return line to see if fluid is returning tot he tank while car is running. simple enough. My hydraulic fluid is black... so might be pump letting engine oil leak in. I guess next step will be to verify that.

SLS system references are in the W123 and W126 FSMs under section 32-501 through 32-741.
https://www.startekinfo.com/StarTek/outside/12265/disc_2/program/chassis_81_to.htm

https://www.startekinfo.com/StarTek/outside/12253/disc%202/program/chassis_500SEL.htm

Hope this is helpful:)