I have been trying to make the same decision. I found a 1986 560SEL that I like for $5500 (was $4500- long story) w/124K in VGC. I have located a few 83 300SD's for $2995 locally and a 84 300SD for $1500., but it has 348K. I would rather have a 300SD, as I hear they typically last longer mechanically and have better fuel mileage, but still have the luxury and style as the 560SEL, but on a slightly shorter wheelbase and the subtraction of a few options that most people would care nothing about. About the 300SD you are considering- I would say buy it, but the water in the front floor would worry me. Could be as simple as a leaky window. If it were in the front- I would worry, as it could be a heater core, but if it is in the back- it may be OK. I would lift that floor carpeting and check that floor pan for rust. The valve cover leaks and oil burning upon start-up on the 560SEL would be a cause for concern. Sounds like the valve seals are beginning to go bad. How many miles are on this car? This could be a costly repair. I would offer them $2000-2500 for the 300SD, if it seems like a good car. Good luck.

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2004 Toyota Sequoia Limited 4wd
1991 Lincoln Town Car Executive
1991 Cadillac Sedan DeVille
1988 Mercedes 300SEL
1972 Chevrolet Caprice Kingswood Estate 9-passenger wagon
1973 Pontiac Grand Ville
(Prior MB's: 1974 240D, 1985 380SE, 1984 190D, 1993 400SEL)