Muck, If you have already determined that it doesn't turn, you or someone has probably pulled the intake "U" shaped pipe and poked on the fan blades to see if they turn. If you went that far, why not try to see if some solvent like Liquid Wrench introduced thru the top oil line would free up the bearing? I suppose it was running fine until one day it lacked all acceleration, and if that is the case it probably has coked the oil at the bearing surface. If this is attempted with the turbo in place you want to prevent the solvent from draining into the pan and diluting the oil. OTOH. maybe a little of it wouldn't ruin the oil, or you could change the oil following this "experiment" if its about time anyhow.
If coked completely oil will not get past the bearing anyhow.
It sure wouldn't cost much to try this, possibly saving $500 or more that replacing the turbo with a rebuilt will run (assuming you aren't taking it to a Benz dealership!)
If that was my car I'd take the thing out and send it to a rebuilder, 1985 was the last year for the big diesels with iron cylinder heads, and are relatively simple to fix and maintain.
Dieseldiehard
'71 220 (gas) present project
'79 300TD w/ '85 turbo engine
'83 300D
'85 300TD

I believe I was writing text while you posted the fact that you are dealing with an independent shop (If you want a heart attack call the dealer on something like this!)
That pic leathermang posted is definitely a '85 turbo, you can see the long linkage from the wastegate to the boost sensing housing, previous years did not have that and also there is a hunk of metal between the exhaust side of the turbo and the short flex pipe that is different.
I suppose I should say that a good used '85 turbo may be worth more is because they are more scarce, but $200 is pretty much tops, even with shiny red plastic covers in place to make it look like a rebuilt unit!
Dieseldiehard

Oh, I started at the dealership (quote $2,200!), which lead me on this quest...

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I'm not a gearhead. I know nearly nothing about cars...so, please be gentle with the ignorant!

Current:
1985 300SD (300,000 miles)

Former cars (of note):
1966 Mustang
1983 300SD (sold it at 320,000 miles)

...$2200 is less than you'd pay the dealer if you lived on the West Coast (isn't everything more West of the Rockies?!)
I see you owned a 300SD up to 320 K miles. You don't want to let go of the '85 before surpassing that figure, do you?
Dieseldiehard

If it's blowing clouds of blue smoke, the turbo needs at least a cartridge, about $400, and if the housing is also damaged, the whole shebang.

What kills most turbos is not idling down after a highway run. You need to let it run at idle (or low load, like stop and go traffic) for at least a minute after driving fast to let the turbine wheel cool off. All that cools it is the oil going through, and the oil feed stops when you shut the engine off. Let it idle a bit and it will last forever.

Peter

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1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!

THAT is some good stuff. Thanks! I had not been doing that...just pulling into the office / home and killing it.

__________________
I'm not a gearhead. I know nearly nothing about cars...so, please be gentle with the ignorant!

Current:
1985 300SD (300,000 miles)

Former cars (of note):
1966 Mustang
1983 300SD (sold it at 320,000 miles)

It is not only the fact of it cooling down.....the turbo is still spinning madly after a long highway run. When you sit and let it idle you are "spooling down" the turbo. If you would shut it off the turbo would sit there spinning without any oil supply.

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'85 300SD (formerly california emissions)
'08 Chevy Tahoe
'93 Ducati 900 SS
'79 Kawasaki KZ 650
'86 Kawasaki KX 250
'88 Kawasaki KDX200
'71 Hodaka Ace 100
'72 Triumph T100R

Look in the parts section of this forum. There is a guy in Texas parting out his '85. Looks like it still has the turbo.......

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'85 300SD (formerly california emissions)
'08 Chevy Tahoe
'93 Ducati 900 SS
'79 Kawasaki KZ 650
'86 Kawasaki KX 250
'88 Kawasaki KDX200
'71 Hodaka Ace 100
'72 Triumph T100R

Muck,

If I were you, I'd definitely put a used turbo on the car. Figure it this way, the car with 300K on it is not worth a whole lot of money and if everything else on it works properly then you're far better off putting the few hundred dollars into it to fix the turbo than to buy another car. If the engine runs fine otherwise, forget about replacing it. Just keep it maintained and drive it till it drops.

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Regards,
Aaron