Seems awfully expensive for a trans rebuild. Have you tried getting another quote?

For used trans, you can't be too far from Potomac German Auto, which is the premier Mercedes dismantler in the USA. Google up their website and give them a call.

I agree with Lee, don't think you'll get much more than $1k for a 124 that needs work to be usable, no matter how nice the rest of it. Also agree with him that perhaps $2500 it the top end, even if everything works.