It's the component that bolts onto the end of the axle tube that the parking brake shoes mount to. I guess you could say it encloses the axle bearing, although I have to admit I didn't think of it that way.
I think I know what you are referring to as a dust shield, which keeps debris off the rotor and is much larger, which is not the part I need.

No, I haven't fitted it into the case yet. I still have not completed dis-assembly, but I did check some things.
Checking all of the diameters of the pinion shaft with calipers, a micrometer and distances with a surface plate and height gauge, it appears that it will fit.
The 3,27 ring gear bolt holes align with the LSD carrier.
The mounting surface height for the ring gear as well as the bearing spacing on the two carriers are the same. The diameter of the 3,27 Pinion is larger than the 4,08 (which, of course, it better be!), but the ring gear height-to the carrier surface is less (which it should be).
Calculating it out, the difference is less than I can measure accurately-really about .005", only because trying to measure from the root of the ring gear teeth is a bit arbitrary. The root doesn't really matter anyway, as long as it's close.
It appears to me to fit. I guess proof is during the assembly. I'm replacing all of the rubber bits. Maybe if it doesn't work I'll have some slightly used swing axle parts to sell!

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Vehicles 1968 250SE;4 speed manual on the floor, no marker lights

I also believe it will fit, but I didn't do it, so I don't know for sure. What I'm sure of is that the carrier will fit, the ring will fit on the carrier, but the offset may be different (larger pinion as you mentioned) so the casing may be different in this respect.

Where are you located?

The pinion is larger but the ring gear is thinner. Dimensionally it appears that all will go together.
I'm glad to hear I'm not the only person wanting to try this.

I'm in Central New Jersey by Barnaget Bay. In Brick.

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Vehicles 1968 250SE;4 speed manual on the floor, no marker lights

Since I'm kind of off into uncharted waters (for me at least) and everyone here has been so helpful, I thought I would post some of the resources that I found helpful.
I hope these links work. If they don't PM me and I'll get you the info.
I don't have access to a good boneyard for Merc parts or even a dealer near me so I found these quite useful

Axle seal kit WITH LOCKNUT (!) here
(Forum won't let me post this address, probably due to length;PM me if you need it)
The single biggest issue that I've had so far is removing the nuts that retain the outer axle bearings. I have to get them off to replace a brake backing plate on one side and the seals on both sides.

I have a friend that is an Engineer that has designed a tool to remove the axle bearing lock nuts. He has sent the CAD drawing to a company with a Water Jet precision cutting machine. I'm eagerly awaiting the tool's arrival. If it works as planned, this should work as a replacement for the (now obsolete) factory tool. I'll also see if he'll allow me to post the drawing somewhere for others to use.

Axle bearing kit with seals

Special pinion nut socket(I actually got mine from Ebay but this is the same)
Baum , 111-0507 Groove Nut Socket Swing Axle Mercedes

Pinion Seal (which was listed under transmission for some reason)
I've found Parts Geek to have a lot of somewhat hard to find goodies. Maybe others have better sources.

KYB Shocks-I'm not putting $500. worth of Bilstein shocks on a project car that is maybe worth $2K completely done up-not that I have plans to sell this anytime soon. If this was a coupe or an SL it would make sense. My apologies to the Purists-

I was able to find the other necessary rubber bits on Ebay-Pivot 'Boot', pivot pin seals, rear coil spring rubber (pads) mounts,trailing arm bushings,drive shaft coupling. I also found a company in Germany that makes a Becker look-a-like with modern features.
Does anyone know if there are rubber pads for the compensating spring? My car doesn't have any, but the spring is a retrofit that was in place when I got the car. I also need a source for modern seat belts. The ones in the car are 40+ years old. As always, any help is very much appreciated!

Cheers!

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Vehicles 1968 250SE;4 speed manual on the floor, no marker lights

Hi, i find it easier to source my parts direct from the classic center and i know they will fit. But I guess it's a matter of economics in these tough times.
Yes, the centerr spring must have two rubber pads and depending on the part number stamoped into the spring,there are three different sizes . The thickness of these is important to allow for a soft,medium or firm ride . There are also pads under the springs on the torque arms and the rubber pad on top of the spring is what determines the ride height. Again,those come in various thicknesses to allow for things like options etc.

So I took some advice from a previous post and purchased parts needed. The pinion nut cost me $60 (!).
In any case the pinion was fitted to the housing. I trial fit the carrier with ring gear and axle tube-no issues.

I can understand why others said the gears wouldn't fit. The casting bosses are fairly close to the pinion teeth, but it clears it . The outer pinion bearing has to be removed from the shaft and housing to get it into the housing. I had to make a tool to be able to get the bearing back into the housing and onto the pinion shaft as it has to be pushed into place. It went together though.

Pinion nut was torqued to about 80 Ft.Lbs. (can't really torque it properly because I don't have a way to hold the pinion flange and housing at the same time).
Pinion bearing movement (along axis of pinion shaft) is .002-.003. There is no radial movement measurable at the pinion flange.

Checked the pattern with yellow oxide paint- looks pretty much perfect. Drive and coast look about even with a slight bias towards the toe of the pinion.

All looks good so far...

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Vehicles 1968 250SE;4 speed manual on the floor, no marker lights

So my years long project came to an end today.
After finally getting the last of my home repairs completed from damage from Hurricane Sandy, I went back to my diff. project. When I left off, back in 9/2012, the diff was 3/4 assembled.

I thought it was high enough off of the garage floor that it couldn't possibly have gotten wet. I had coated everything with grease, too.

Wrong. All of the internal components are toast. I might have been able to salvage it if the pinion teeth didn't get corroded, but they are. I'm gutted.

I've done a ton of work and the car actually looks pretty good. Without the gearing change though, the car isn't really driveable around here.

I've had enough. The 250SE is going up for sale.

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Vehicles 1968 250SE;4 speed manual on the floor, no marker lights

So...after the flood waters receded and I took the diff apart, I decided to contact my insurance carrier. They paid for the damage (up to the max limit) to the diff. The only used diffs I could find with the taller ratios were very pricey-$1500+!
Figuring I had nothing to lose, I stripped it all back down again, replaced all of the bearings and any other damaged parts. Most of the rubber items were salvageable. Luckily the limited slip had enough old gear lube coating it that it wasn't badly damaged
I cleaned up the ring and pinion teeth. I ran the gears together with lapping compound and most of the pitting cleaned up. I reset the ring and pinion and the gear pattern looked just as it had the first time I tried to do this.
I had to replace the exhaust (rotted out; probably accelerated by the seawater). The "center" muffler is a bit pricey anyway , so I eliminated it. I then fab'd up the exhaust only using the rear muffler and the pipes that would normally connect the mufflers.

It works great! The car is much more driveable with the taller gears. The muffler deal worked well too. The car is slightly louder, but not much more than with the old exhaust. Only took two years to finish it!
It's quiet enough that I found out the drive shaft center bearing is gone...oh,well. On to the next project/thread...

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Vehicles 1968 250SE;4 speed manual on the floor, no marker lights

Good to hear and with a down home ingenuity (lapping paste to clean up the teeth ....) you have done what others said couldn't be achieved. In the case of the casting boss being too close,I am sure a bit of work with a grinder could clean up any excess material.
We had major floods here in 2011 and i know of a fleet of mercedes collectible cars that went under. The owner had recently dided and his decendents were too busy fighting over who got what to think of the cars.
As a result some are still not repaired ,including a 300SEL 6.3 which had a $250,000 resto in 2008.

Hi Tommy MacDaddy, or any one else. I haven't been online for awhile but just stumbled upon this post. I have an entire rear end from a 1972 280SE 4.5L I intend to put into a 1967 230, but I would like to replace the pinion seal (and other rubber parts) before installation.

Does anyone have a PINION NUT TOOL they would like to rent out or sell used? My car is garage kept and rarely driven (I know it's not good for the car), so I don't want to invest in a tool I will probably not use again (for many years at least).

Also, any suggestions on how to remove the compensating horizontal spring from one axle to the other?

Will the brake M/C reservoir from the 230 fit the 4.5L m/c?

Thanks for the advice.

Hey Coolvibes

Mark the positions of everything before removing anything. You will be happy you did.

You may have more luck than I had removing my pinion nut. I made up a plate so that I could hold the pinion flange. I rigged up a gear puller to prevent the socket from camming out. The 'castle' edges of the nut were still damaged enough that re-use was not an option. The socket I used is not in great shape either now.

Use a MacPherson Strut-type spring compressor for the compensating spring. Remove it before taking the axle assy. out of the car and reinstall in the car too.
I'd look to see if the two M/Cs have the same replacement PNs. If they do the reservoir cap should fit too

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Vehicles 1968 250SE;4 speed manual on the floor, no marker lights