I finally replaced the fuel filter and the o-ring of the pre-filter. Here is how I did it and want I learned in the process:

http://208.55.38.244/images/fuel filter 1.gif

The image above shows the top view of the fuel filter as assembled. By unscrewing the large bolt (Number 1 in the picture) the fuel filter is released. Be careful, the filter element is full of diesel fuel. Do not tip it when removing it. Place filter element in a vertical position.
Now unscrew the smaller bolt (number 2 in the picture). After is removed lift the locking washer and lift gently the pre-filter assembly with the help of a small screwdriver. Separate the hose from the pre-filter subassembly. Once released from the housing replace the o-ring (part number 601 997 0148) onto pre-filter subassembly. Place prefilter subassembly back in its housing.
Now, take the new fuel filter and fill it the best you can with the diesel fuel from the old filter. Then put it back and screw it in place.
Go back to pre-filter subassembly and add additional diesel fuel until full. Press the pre-filter hose into the pre-filter assembly. Secure it in place with the locking washer and its screw.
The trick of the entire operation is to have no air left in the filter element of in the pre-filter.
Everything takes about 10-15 minutes.
Start the car. You may encounter a few false starts (some air pockets were left). After a few starts they will be gone.

Good luck.

PAT
1999 E300TD, 51k