Hi All
I was delighted to see this topic as it seemed the answer to my 87 300D problems too! However on corresponding with psfred am going for a compression test tomorrow.
Unfortunately my car produces a good bit of smoke(as well as the other symptoms described by psfred) at low rpm and recently runs mainly on 5 cyls. If it does go on 6 a loud knock/clack is heard. I notice a few tiny globules of oil in the coolant too so maybe a head gasket is at fault. Will let you know how I get on with the mechanic.
Gerard