FWIW:
The W123 seems to have a weak dash light design and was improved considerably with later models. My W124 is much better than my W123 and they are only two model years different. While I can't be sure about the xenon bulbs causing the melting I got in my W123 instrument panel, there certainly is strong circumstantial evidence that they caused most of it. Those with the W123 chasis may want to be careful drawing conclusions from experiences that people with later cars may have since the setup, while similar, is not identical. My guess is that after 8 or so years of the W123, MBZ realized they had a design weakness in the dash lights and improved the later series cars so as to be less susceptible to heat/melting problems. At least for the W123, I'd recommend you try all the other remedies you can find on this board first before you try the xenon bulbs.

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LRG
1987 300D Turbo 175K
2006 Toyota Prius, efficent but no soul
1985 300 TDT(130K miles of trouble free motoring)now sold