Remote diagnosis is difficult. I have two M104 cars ( The 24 valve version of your M103 ) and they are clock work smooth. However they are 97 C280 and SL320 with a very developed fuel injection system. The 280 has smoother idle due to a shorter stroke.

Does you engine have full electronic injection or CIS-E ( electronic control of a mechanical fuel injection system ) ? Full electronic injection will have a ~ 3/4" diameter tube running the length of the engine that the injectors will plug into and each injector will have a wire running to it. CIS will have a 1/8" diameter steel tube running to each injector, the other end of the tube will go to a fuel distributor.

I don't have much hands on with the CIS system and anything I have was scattered across a few different makes with a bit of time on my 91 300SL parts car. There are some threads here dealing with CIS issues. This would probably be a good thread to start though I haven't read it. http://www.peachparts.com/shopforum/tech-help/369369-duty-cycle-stuck-90%25-89-300sel.html

The M103 engine should still have an ignition distributor and these tend to have issues with arcing under the cap.