Typically gasoline tachs operate by reading voltage pulsations from the power wire going into the primary (low voltage) side of the ignition coil, which sees an inductive voltage spike every time the coil secondary (high voltage) side is fired.

The diesel tachs are set up to read in a similar way, the crank sensor generates a millivolt pulse every time the balancer pin passes by, which is fed to the tach amp that sends an amplified signal to the tach, I don't know if they are interchangeable.

Also one other thing you should know, you say you have the sensor there going to a round plug, but don't origionally have a tach. MB did this on some of their cars for diagnostics, the good thing is you have a sensor bracket and balancer pin. The sensor however will need to be modified or changed. The actual sensor is the same, but the round plug on it is different than what you will need, I have pics somewhere of each, but the plug you need is (trying to remember) either going to be oval or half round, to fit into the tach amp with the other amp plug. You will also need to get a tach amp and bracket for it. Also beware the tachs and amps have 2 different types, depending on year, (I want to think 85 was the cutoff year) they changed when the cars got computerized. I just went thru this process myself for the 82 I'm rebuilding.

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Chris
64 190D R.I.P.
80 240D W/617 engine -for sale
82 240D -for sale