With the increase in fuel prices the value of the 107's cars are dropping. But 9K to 10K at 120K miles for a 1989 is still a good deal if it's as good as you describe and the repairs from the dear strike were done well. But being a deisel owner you might be discouraged by the fuel milage. I average about 15.5 mpg mostly highway. I do get 17 mpg on pure highway driving. And it requires premium fuel.

At 120K it should have already had it's timing chain and rails replaced. You will need to check on that. And make sure the rails not just the chain were replaced. That should be 3 upper rails and a tensioner rail. Usually the cam oiler plastic fittings are replaced with the rails as well. Also look for signs of oil leakage from just forward of the transmission. What looks like a rear main seal leak is most likely a head gasket leak.

The cars are pretty bullet proof once they are fully mechanically restored. The only real weak areas would be the heating and air conditioning system. The AC push buttons seam to break at random. Other problems that you may encounter at the milage and age of car you are evaluating are:

Head Gaskets
Drive Shaft
Subframe Mounts front and rear
Engine Mounts
Dash board will most likely be cracked
Convertable top
Door and window seals
AC center vent actuators (The rest of them too, but the center's are in the $2000 location).
Side windows may have the guides fallen off (Check if window rattles in door when you close it)
Exhaust System

The above list of problems are not chronic in that you should not ever have to expect to have to do them again once they are done. But they are typical problems found in the 560SL at the age and milage you describe. If you can tell from the service records that these have been done, then you are assured that the likely hood of having to repeat these services is minimal.

Of those problems listed above the head gasket will be the most costly to you, expect $4000 from an MB dealer or $800 if you do it yourself including all the extra stuff you will be replaceing besides the head gasket when you get into it.

John Roncallo