There's lots of reading for you in the Diesel discussion forum archives.
If you're a competent wrench, you can replace the head for around $2000. Needing lower end work complicates things.
The best sources for parts are the FastLane and PartsShop links at the top of this page.
You can try Metric Motors (
www.mercedesengines.net) or
www.adsit.com for rebuilt long blocks. I believe Metric Motors is in the San Fernando Valley. Good for logistics, bad for sales tax. I think you're looking at $6000 for a rebuilt long block, which is more than the value of the typical 200K mile 87 300TD.
Try wrecking yards such as Potomac German Auto (
www.pgauto.com) or whatever's local to you for running long blocks. There's no absolute way to check for head cracks on an assembled engine though.
My take is that the car is only worth repairing on a DIY basis. There's no financial sense in paying someone to do it at today's hourly rates.
Sixto
95 S420
87 300SDL