I'm experiencing a severe vibration up to 40mph, at which time it goes away. Anyone know what I should look for?. Thanks

Check the flex discs pronto. It may not be the problem but if it is and they fail you may have some real damage. Do a search under flex disks and you should get all the info you need.

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LRG
1987 300D Turbo 175K
2006 Toyota Prius, efficent but no soul
1985 300 TDT(130K miles of trouble free motoring)now sold

Driveshaft vibration will be at a much higer frequency than wheel vibration. By FAR, the most common source of vibration is wheel/tire related. If it does turn out to be driveshaft vibration and the flex discs are solid, then it is possible that someone let the splines come apart during service and did not get it put back together in its original orientation. This throws the driveshaft out of balance.

Good luck,

The driveshaft carrier bearing is something to check. That will cause a vibration on the W123 wagons which is very noticeable.

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Regards,
Aaron