As said so bar, B3 bands are probably worn and need replacement.
Any history of a rebuild in its time? If not, 267k is pretty good for a no-reverse!!! If everything else in the tranny is working fine, just repair reverse and keep driving! Its only about $180 in parts and fluid to fix it assuming the piston is good.
More info and pics here:
http://www.w124-zone.com/articles.php?article_id=21
Fastlane at the top of this site sells the spheres.