I would never use a sealant on my valve covers. Make sure they are torqued to factory spec. On the M119, the valve cover bolt washers are copper and should not be reused; but it looks like your bolts are much larger, so check the factory manual.

Are you using a factory gasket? I have had problems with new Victor Reinz valve cover gaskets on M119's. I would recommend using a factory gasket. (Others would differ.) For some reason the factory gaskets fit the valve covers better and I have never experienced a leaking problem with a new factory gasket. Of course, if you are using a URO gasket, I would not be surprised at all to see it leak. Indeed, I would be surprised if it didn't leak.

Feel around the gasket to make absolutely certain that it is seated correctly and doesn't move when you install the cover. You can use a telescoping mirror to visually check the back part.

EDIT: In your pictures above, it doesn't even look like the cover is torqued down. Is there something obstructing it? I can see space between the gasket and cover.

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1993 400E, 256,000 miles (totaled)
1994 E420, 200,000+ miles
1995 E420, 201,000 miles