The electronics of the M116(420) will run the M117(560) just fine; the differences in the calibration are minuscule, and with O2 feedback the mixture is kept at stochiometric anyway.
The M117, however, has different exhaust manifolds, crossover pipe, and down pipe. Those would have to be sourced with the engine.

I will be the contrarian. I would only fix it if it is less then $300 total otherwise dump the car. Old MBZ is bottomless money pit. Salvage some useful parts then part it out. There is a lot of car in the $2500 range. You drop an engine in then somewhere else will break, then back to square one.

I would disagree, at least at a $2500. You can find a lot of cars in that range but every single car I have looked at or bought in that price range has needed lots of suspension bits replaced plus a litany of other work. I'd say if his in good shape otherwise, both in a mechanical and cosmetic sense, he should fix it or he'll waste a lot more time and money on the new car than this one. It sounds like this one is otherwise well-sorted, it's had it's suspension redone, repainted, window seals, etc. If this one has rust then yeah, it's junk, but otherwise it's better to stick with a car you know than one you don't know. He'd do better looking at cars closer to $5k, they'd probably need a lot less work than something at $2500.

I am sure a lot of money had been spent on the car. That is why the OP is facing a dilemma. Personally I like to sort out the drive train before investing on paint, suspension or other cosmetics stuffs. You get a feel on the engine and tranny, say after 10k miles, then you invest on other stuffs. The car does not burn 1 qt oil per 180 miles overnight. If it were me, I would not spend the money on paint work and the rest with a questionable engine. Enough said, I am only offering an opinion, it is not my money.

James, from my experience replacing the evaporator will be very expensive because the car seems to be built around the evaporator ... requires removal of the dash and is a very involved process. I would confirm the refrigerant leak source before making a decision on engine work, unless you can live without A/C and the inherent benefits.

If it isn't rotted all to hell, why not just replace the motor and drive it into the ground?

Jake that's sort of what I'm leaning towards. IDK if that is full replace or just rebuild, etc. I have to look at options and see what can be had.

I spent some time on it today. I fixed my radio issue, got a new RCA cable ran and changed the amp. Fixed up a few interior issues too. I didn't see any rust in the areas I worked, just dust and dirt. Trunk was dry too, no issues there, well except for the leather cleaner bottle I left in there that leaked a bit.

I would like to do a more extensive rust investigation.

I rev'd the motor a few times checking for alternator whine..oh boy did that get messy at the tail pile. If I didnt tell you it was a gas powered car you'd think it was a diesel!

These cars solid bottom ends. My '87 300E had 250K on it with a valve job on the top end and was strong as all hell! Excellent compression, stopped burning oil after the valve job. MB gassers are almost diesel quality IMO.

I say do a top end job, call it a day. Keep driving it until the wheels fall off, literally. You already have so much into it now according to the PDF. Why stop now? It's served you well, and you've taken care of it. So breath some life into it and drive her like the MB manufacturers intended it. That's what I'm doing with my 98 E300 and 92 300D. My 98 is immaculate after repairing all the rust and paint, and my 92 held up so well after all these years I'll keep spending the money to fix them both.

As long as the under body rust isn't bad or is at least repairable/treatable I think that is what I'll do have the top end done.

I am also in the middle of rebuilding my 91 300D. Its was in a deer hit incident last year. It has 321K on it now. Body shop said its rust free! So it got a complete repaint (took it down to bare metal). New MB fenders, used hood, new mirror rubber. Got all the rear suspension parts in a box here, new front brakes,etc.

I got the radio alternator whine fixed (I think/hope) today. I had the car backed up against the garage and rev'd the engine a few times...

https://scontent-ord1-1.xx.fbcdn.net...98&oe=58458E2D

I'm interested in seeing your 321K 300D to see how its held up.

http://i.imgur.com/ea9NYxS.jpg?1

Here's mine at 310,052

Just to give you some extra options:

http://www.benzworld.org/forums/attachments/w126-s-se-sec-sel-sd/494239d1360219022-w126-replacing-m117-m119-does-work-satish_sec.pdf

Oil consumption indicates valve seals, but at that mileage the guides may be worn too, which would require rebuilding both heads, and it would be a good idea to replace all the exhaust valves since they are subject to thermal fatigue.

Valve seals can be changed without removing the heads, but then when you get the springs off and the valve stems wiggle in the guides it's off with the heads. Your estimate sounds pretty high for rebuilding the heads assuming you do the R & I.

The short block is probably okay. The embedded silicon bore surfaces (first used on the Vega) have one-fifth the wear rate of cast iron and will last virtually forever as long as they don't score. That was the problem on Vega blocks. The etching process was uneven resulting in some overetched areas and some with little or no etch. The latter allowed bits of aluminum to be torn off, which scored the bores. By the time GM gave up and licensed the process to Porsche and MB, the uneven etch problem was solved.

Pretty much the same with bearings. They don't actually wear as long as original clearances were not too tight, proper engine oil is used, and they don't get oil-starved due to insufficient oil in the sump, but will eventually spall due to fatigue, however, I expect they should be good for at least another 100K miles.

Duke

BTDT. You've got an active multi-thousand dollars a year money pit. I would cut bait on it and sell it on CL - while it's still running.

I agree with skid. At one point I had 3 benzes and my wife's car. These cars siphon you a few hundred dollars at a time, winds up being thousands per year. Multiply that times 3 cars, (that I had at one point) and you can quickly see this is not a cheap hobby.

Add insurance, plates, etc. and the mental clutter that owning so many cars will add to your mind.

I ended up getting rid of all of them, bought the wagon that I wanted, spared no expense making it right, and with all the extra money I saved I bought a 2010 E63 AMG.

Best of all, I no longer spend my weekends fixing a fleet of crappy cars. I can do some work to my wagon, if I want, or I can just enjoy driving a car that gives me 512 very reliable ponies.

What I am not clear on, was how many of his other 8 Mercedes Benz listed in his long list of used MB fleet, are also DDs. If he's got 8 cars to drive, then he could postpone repairs on the 420SEL, indefinitely.

I answered from personal experience of dumping $3K+ annually in my ONLY DD (Daily Driver).

To be honest, if the DD were a non-rusting W126 - 82 - 84 300SD, then, I could see trying to do your due diligence in keeping it on the road.