That's a rear sway bar link to the trailing arm.
The Hanes manual for the w123 series is decent (the car they use for the teardown is a 300TD) but there are large gaps in the info (almost nothing on the vac system). It's also a little patronizing--"this job should be left to a professional."
The MB service CD's for the w123 are ok: more complete information, but presented in a convoluted fashion--also, some of the diagrams and pics are very unclear.
Really, this forum is the best place for info.
Good luck!

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1999 E320 4matic really nice Wagon 135k
1981 300TD loud, rattling family car 180k (TGI sold!)
1985 500SEL gas guzzler 220k (sold)
1978 300D my first Turtlediesel (sold)437k