I'm not a 500 series specialist, but loosing compression on one bank sounds like maybe a cam timing problem on that bank. Like the chain skipped a tooth or two, or maybe a broken cam shaft on that bank. Sounds serious.

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1984 280SEL, 62,000 miles
Euro model in the USA
1983 300D (Totaled out 10/2004)
New Factory Mint Green paint
Palomino int
1982 240D (Steak dinner for two)