To be fair, I wouldn't buy ANY make with 169K on it w/o proof of maintenance if I needed a reliable car. I sold my Escort eons ago with 150K+ miles, my Mustang with 140K+, and my Taurus SHO with 160K+. All were outstanding cars.

That said, I'd agree that fixing the Mercedes is the way to go. It's bought and paid for; OP can use the forum's expertise to help prioritize repairs, and perhaps can find some bargains in the parts classifieds to keep costs modest.

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1992 300D 2.5T
1980 Euro 300D (sadly, sold)
1998 Jetta TDI, 132K "Rudy"
1974 Triumph TR6
1999 Saab 9-5 wagon (wife's)