Sounds to me like it's a noisy lifter/tappet/lash-adjuster. Does the M104 have hydraulic lifters/lash-adjusters? The tap, while annoying, isn't going to hurt anything since it goes away quickly when the engine is started.

You can try some Mobil-1 full synthetic for a couple thousand miles and see if it helps (Italian Tuneup does help, one of the absolute worst things you can do for a car is drive it like "Grandpa"). Some people have had success using synthetic oil to get the lifters to stop tapping, though it didn't work for me. I replaced the set in my SDL. The SL still taps when started from cold after sitting for more than 3 days. I'm not losing sleep. The SDL tapped all the time, cold or hot. That's when you know it's time for replacement.

__________________
Current stable:
1995 E320 157K (Nancy)
1983 500SL 125K (SLoL)

Gone but not forgotten:
1986 300SDL (RIP)
1991 350SD
1991 560SEL
1990 560SEL
1986 500SEL Euro (Rusted to nothing at 47K!)

Gone and wanting to forget:
1985 524TD 167K (TotalDumpster™) [Definitely NOT a Benz]