The 124 service manual states that SLS system has a minimum pressure which is maintained regardless of the position of the control valve. This is because the SLS partially supports the weight of the unloaded car and partially because some pressure is required for the struts to provide damping (they are also the shocks).

Basically, you can only lower the car to certain point by adjusting SLS. At this point, you would need to change springs, spring pads, or cut the springs to further lower the rear suspension. Sounds like you are at that point.