Uh, oops - I forgot the main part of your question - the best diesel; I will tell you why I like the 123's with the 617 motor. They made the 123 body style from 1977 to 1985, so body and interior parts are plentiful. Many thousands of them still ply the highways in exceptional shape despite having 400,000 miles on them. (My 83' with 250000 miles on it is still very solid, shiny, comfortable and reliable, and makes the Buick I owned before it with 1/3 the mileage seem like a complete p.o.s.) They have great handling and brakes, and an incredible turning radius for easy parking and city manoeverability. Parts are plentiful and quite inexpensive. They are straightforward cars that a person of modest mechanical abilities can service themselves.
Others on this forum have argued well for the 126 models because of the comfort and admittedly better looks. They also have the 617 engine, but with more wheelbase & weight they do not handle or perform quite as well as a good 123. None-the-less, I think my next diesel will likely be a 126, when I find just the right one.
I have driven the 240 with a non turbo diesel and an automatic, and consider it to be almost dangerously slow. Go for the turbo 5 cyl or the newer 2.5 (which I will admit that I do not know as much about, other than that they are known reliable performers with enough jam to get out of their own way) Be very wary of the 3.5 litre diesel. Do an archives search here to find out why. Some people have put 200,000 or more on them, but generally they are a weak diesel that has demonstrated great unreliability.