When I got my 560SEL (my 300SD went to my mum) my dictates were, in order of importance:

1 - All service records, with nothing missed, especially oil changes
2 - A late model, for reasons stated in posts above
3 - The best possible paint and interior condition. It is very expensive to recover seats and properly repaint bodies.
4 - A warm, dry climate car which reduces the risk of corrosion, though the 126 chassis seems to be very good in this regard.

I was prepared to pay top dollar, anticipating 15-20 years of ownership. I had owned my 1983 300SD for 14 years and 150k miles and remain enamored of the 126 chassis design, aesthetics and execution.

However, I also recognised that the 420/560 engine has one Achilles heel - brittle upper chain rails that generally need changing at 100k or so (my car had 85k when purchased, now at 100k) and a cam chain that may also need to be changed at that time, though frequent oil changes seem to correlate with longer life. Given that I am comfortable with doing these jobs myself and the parts are inexpensive, lots of chain stretch and old rails were not disqualifying issues for me.

My 1990 has dual air bags, but sacrifices the very useful glove compartment for a much smaller console box with a fragile roll top cover. It has ABS. I think 1991 may have added ASR, and CD player capability through the Becker head unit, with the CD player trunk mounted. I have read that post 1987(?) cars have hardened cams which are less wear resistant, but have never seen anything definitive on this topic.

Yes, it's a gas guzzler - 14mpg (the 420 will be a little better) but gas is as cheap, inflation adjusted, as it has ever been in the US since J. D. Rockefeller was a lad.

I preferred the 560 over the 420 because of its heated and reclining rear seats (may be an option on the 420) and its low maintenance hydraulic suspension. The rear accumulators are easier to change than shocks (I replaced mine when I bought it) and the system has been tried and tested on the E class wagon for years. I will change the hydraulic fluid at 30k intervals, like I used to do on my 1980 300TD wagon and the accumulators every 80-100k miles, depending on the ride. Worn ones 'pogo stick'. As the system is self-bleeding, it could hardly be easier to do.

My 'must do' work has been: Accumulators ($200), front Bilstein shocks ($125), chain rails and tensioner ($100), EHA valve ($140). New belts - $75 or so. Labor was my own - so either free or very costly, depending how you prefer to spend your time.

Discretionary upgrades were: 8 hole 140 chassis style wheels to replace trashed originals ($600 for 5 from FRH International) - the interstices are much easier to clean than those on the OEM 15 hole ones, a Nakamichi MB-75 in-dash 6 CD changer/radio to replace the tired OEM Becker - $600, a cleaning and redye of the cream leather on the driver's seat ($100) and a Code Alarm remote entry system for $100.

Most of this is documented on this board which is an invaluable resource when contemplating the purchase of an older car.

Steve Brotherton has written that the bottom end on the M117 engine (420/560) is pretty well bulletproof, with lower chain rails routinely lasting 400k miles.

Problems? A bad fuel pump relay made starting hard at 95k - another common problem with these ($50 or so), 2 minutes to install. The EHA valve started to leak, with gas odor in the cabin ($140, 3 minutes) at 100k.

Anticipated problems? The chain will have to be changed in some 60k miles when it will have stretched 8 degrees (it's at 5 degrees now). The car is on its second OVP relay and I carry a spare - it will go out eventually ($60, plug and play). Sometimes you can fix the relays by resoldering the connections. The transmission on my 300SD started to slip at 135k miles, albeit that car suffered much more town use than the 560, but an overhaul may be due some time in the next 100k. And finally, if crude oil goes to $60/barrel, I might revert to the diesel.

If you do not do your own work, be prepared to pay the 'Mercedes premium', the result of the mistaken belief many mechanics have that the MB owner is so replete with cash that the world would be a better place were he to be relieved of it.

Finally, it bears repeating the wisdom of others - do not rush. There are lots of cars to choose from out there.