That vehichle has the same engine as my '94 C280 - the M104 inline 6 cylinder. There is a special tool for removal of the oil filter housing cap. It is a standard size and will fit other MBs (I use the same tool on my wife's M112 V6 engined W210). The oil capacity is 6.5 litres. IIRC the original factory spec called for 7 litres to take the oil level to the top fill mark on the dipstick. However a subsequent TSB indicates that this is too much oil and was apparently responsible for some leaks on the front seal and changed the spec to 6.5 litres, which on my '94 has the oil level dead in between the top and bottom marks on the dipstick.

As for what kind of oil, this is opening up a can of worms here. As you said, it is the owner's choice to use synth or not. You do not have to use synth, which is required in the 1998 and newer vehicles using the Flexible Service Schedule (FSS). I personally use Mobil 1 5w50 synthetic. My car only gets 5-6000 miles a year on it, with a lot of that being short trips. It also allows me to get away with a single oil change per year instead of having to change the viscosity to better suit the season. I also find that the M104 is a hotter running engine than newer ones like the M112, so I like the fact that I have a wide viscosity range that protects me on frequent cold starts/short trips as well as providing great heat protection when I do get the car hot. I also have a bit of seepage on my head gasket and I found that the 50 weight element has resulted in less seepage. Just my personal observations.

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Jonathan

2011 Mazda2
2000 E320 4Matic Wagon
1994 C280 (retired)