Are you sure that's not a partially sheared off bolt? On my M103, there's a coolant "bleed" bolt in that spot that I use when filling the block with coolant. It prevents air bubbles from accumulating.
The 14mm bolt to the left of it accomplishes the same task.

Do you have a Euro version 300E??

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-Paul-
'01 E430, Sport 72,000 mi
'98 C280, 126,500 mi