Congrats on your getting a 1987 300TDT. The W124 diesel wagon is a bit of a rare one since it was only offered one year in the US. I recall when I first got mine in 2004 it had roughly 185K on it, and the seller was getting calls on it the whole time I was looking at it.

Along the same lines as nckmsn suggested, if fuel is getting to the cylinders, then the glow plugs should be checked. Normally if the key is left in the glow position the plugs will glow for approximately 30 seconds then shut down.(This varies with ambient temps.) The glow plug lamp time varies according to the underhood temp sensor in the glow plug relay. The easiest way to check the glow plugs is to measure the resistance of each plug to ground. The resistance is less than one ohm for each plug. The next best thing is to use a clamp on DC ammeter and measure the current to each plug. The initial cuurrent draw will be 30A per plug. The current draw of each plug should be 8-15A after 20 seconds of glow time. The glow plug relay may not even be closing, and this will become obvious when measuring the current. There is also a fuse in the glow plug relay that may be open.

One other thing, I would strongly suggest getting a FSM (Factory Service Manual) to aid in your troubleshooting efforts.

Good luck,

-Steve

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1987 300TDT smoke silver w/ burgundy leather interior
2000 VW Passat wagon indigo blue w/ beige leather interior
1985 Mustang SVO
1970 Chevrolet K10 fleetside, shortbed