1984 380SL Gray Smoke from Exhaust Issue
 

The Benz starts right up and runs then after a couple of minutes starts emitting a dark gray smoke from exhaust tail pipes really bad causing smoke out. Whats the best way to diagnose this?

I could be a loose valve guide or something in the valve train. Pull all of the spark plugs after a short run and see which one/s are wet or fouled. It might help you narrow down which cylinder that's having a problem.

Thank -you for your reply. I did replace the O2 sensor last night because the Benz seemed to be running rich as well. I definitely noticed more take off power, but the smoke out came back again.
The old sensor probe was covered in black residue and I noticed oil seepage coming out the the manifold pipes that connect together right before the O2 sensor. Will pull the sparks plugs as you suggest. Are the value guides difficult to adjust/replace? What would I be looking for? Thanks!

A loose valve guide can only be repaired by removing the cylinder head. It's no small amount of work.
It could also be a valve stem seal that popped off but that usually means the guide is worn anyway so I would start by removing all of your spark plugs. Lay them out in order and compare them to a cleanly burning plug. Normal color should be light tan on the insulator and ground electrode. If any plug/s appear to be wet or covered in dark brown deposits that would likely indicate oil leaking into that cylinder.

1984 380SL Gray Smoke Issue
 

Thank-you again for your input. Just took out the plugs, Most of the plugs appear carbon fouled per Verrill spark plug reference chart, Except for #6 appears to be oil fouled and #4 is close to normal. I did replace the O2 sensor that might correct this with new plugs? Should I do a compression test next and check the PCV value to see if it's plugged? Not sure where it's located though....