I am having exactly the same problem, adding a quart every 700 miles. Many people suggested to take the car to an MB shop for a diagnosis instead of guesssing around. I am still waiting for other hints, getting diagnosis from MB shop is something you can surely do anytime without any TechHelp forum .

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1996 E320 since 1/16/08, 171K miles as of Feb 2011

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1989 300CE - R.I.P. Dec 29 2007
Other MBs (sold): 1992 300E-24 - 1979 350SLC - 1984 230E - 1990 300CE