That is an electric switchover valve for your EGR system.
Go here

http://skinnerbox.steaky.org/123_DISK2/program/123-cd-index.html

Job 14-050

Go to page 15. It will show you the unit.

Fastlane has it for $27.90
They call it a Elect. Change-Over Valve

Now make sure you look at all the connections, don't just settle for finding one leak and think the system is fine now. Your engine looks "used" so you may have some other vacuum system parts that may need attention.

Your car is a California version.

Dave

__________________
1970 220D, owned 1980-1990
1980 240D, owned 1990-1992
1982 300TD, owned 1992-1993
1986 300SDL, owned 1993-2004
1999 E300, owned 1999-2003
1982 300TD, 213,880mi, owned since Nov 18, 1991- Aug 4, 2010 SOLD
1988 560SL, 100,000mi, owned since 1995
1965 Mustang Fastback Mileage Unknown(My sons)
1983 240D, 176,000mi (My daughers) owned since 2004
2007 Honda Accord EX-L I4 auto, the new daily driver
1985 300D 264,000mi Son's new daily driver.(sold)
2008 Hyundai Tiberon. Daughters new car