Generally speaking if you are wanting advice about diesel engines then you are best off asking in the Diesel section (DD) of this forum. Some of us migrate between DD and tech help - some don't.
First step - go to
www.startekinfo.com as engatwork says and click on MB workshop resources then CD/DVD to find the W123 manual.
Second step - although this isn't written in the book my advice is to fit the head (new gasket needed!) and fit the camshaft and the camshaft towers.
This is the point where ideally you should be fitting a new timing chain. (IWIS brand)
If you are going to fit the old chain the procedure is a little bit more complicated if you have lost your place.
NEW CHAIN =>
Camshaft tower has a mark - crank set at TDC on cylinder #1
Fit the new chain and camshaft sprocket before fitting the rocker arms / camshaft followers to give you time to know that you have the valve training timing correctly set. You can rotate the crank (ONLY clockwise direction when standing in front of the engine looking at it) to your heart's content safe in the knowledge that valves will not be hitting pistons. Check the TDC and camshaft mark. Don't forget the effect of the tensioner!
OLD CHAIN =>
If you are fitting a used chain you essentially do the same as above but as a last check you need to perform the 2mm lift check and fit an offset key to bring the camshaft timing back into the correct position. You will need to fit the first set of camshaft followers to allow this test to be performed. On a seiously elongated timing chain you could get piston and valve interference if you are unlucky. This is a potentially dodgy process to perform!
If you have lost your place with a used chain you are best off getting a new one.
Third step - you now need to set "begin of delivery" on the injection pump so the fuel gets added to the cylinders at the correct time.