I would replace the O2 sensor first with the short and the heater fault. Be sure to use the OEM O2 sensor on that car. O2 sensor is not a place to cheap out!
With that out of the way next I would adjust the mixture on that M103. There is an excellent article on the Bosch KE3 Jetronic Mixture adjustment. The website with the instructions is
www.landiss.com/mixture.htm . You just need a volt meter and a calculator unless your good with doing math in your head. Its a great article! It has bailed me out many times on my 88 300E M103 . I keep a printed copy in a folder for the car. Good Luck John
