I would leave that Porsche-built 500E the way it is...when Porsche and Mercedes come together, the metric gods tend to have their way...and you won't wanna mess with them
Other than that, you
will run into computer issues if you try to adapt the 606.962 (engine from '98-99 E300 turbo) to a W124 chassis, i.e. the 500E. The engines in W210 E-classes are electronically-controlled, while those systems in W124 E-classes are mechanical. You would get into injection pump swaps, modifying the 500E chassis and driveline for a diesel engine, screwing with the computers in the 500E...the list goes on....
I would think that a CDI is out of the question.....
IMHO, you're better off just buying an E300 turbo and having the same engine, a
better transmission (5spd vs. 4spd), and a more modern chassis. You could even find the lower body parts from an E55 AMG if you wanted a sporty-looking car... AND, E300s like chips.
Just my 2¢.