The first order of business would be to have Enrique check the car. He's in the best position to evaluate the major systems and distinguish small problems from from big problems. The 86-87 MB 6cyl Diesels have a higher than average occurence of cylinder head cracks when the engine overheats. Enrique should be able to spot symptoms casual observers will miss. When a seller says that an 86-87 MB 6cyl Diesel needs a head gasket, water pump, radiator, thermostat, etc., it's a pretty safe bet that there are advanced cracks in the cylinder head. This shouldn't disqualify the car necessarily since you're ~$2500 away from an engine that is practically as good as new.

As with any MB of this vintage, make sure everything works particularly in the unintuitive ACC system. Most things other than the ACC are easy and not particularly costly to repair. If the AC system has been converted to R134a, it's possible that the cooling ability will be borderline or inadequate in the summer. I've felt how good an R12 system can be and I've yet to see an R134a conversion that compares.

I don't think any SDL came with MB Tex upholstery. Consider the price of restoring the leather if the interior looks tired. Or maybe you don't mind such things.

You should feel the transmission go through 3 distinct shifts as you accelerate. The shifts should come at roughly the same rpm in each gear with the same pedal position on level ground. Be wary of delayed shifts or shifts that include a noticeable revving of the engine. Sometimes these are small problems like low fluid level but sometimes the only solution is a full rebuild.

These cars are reasonably quick. 0-60mph can take as little as 12sec. A slower car ususally just needs the boost signal line to the injection pump to be cleaned. Many MB turbodiesels are sold for below market value because the boost signal line is clogged making acceleration an oxymoron.

Even if you're in SoCal, check for rust. Body integrity of the W126 series is very good but don't assume anything.

This barely touches the tip of the iceberg.

Sixto
95 S420
87 300SDL
83 300SD