1) You need Sportline swaybars (or what I call "Sportline Plus", which is a front limo bar and 500E rear.) That will reduce body roll without a significant penalty in ride quality.
2) Lowering springs will be the main culprit in killing ride quality. Performance improves but you WILL feel every pavement imperfection. If you really want to keep the car comfy, I'd stick with stock springs. Aftermarket springs will work just fine with the diesel, the weight difference compared to the gassers is nil, regardles of what you've been told otherwise. You adjust spring pads to fine-tune ride height and may not need a thicker pad at all. The factory Sportline springs are allegedly VERY firm, so don't get those thinking they're softer than H&R or Eibach! They're probably about the same.
3) Shocks should be purchased to match your springs. Comforts won't work well with lowering springs - not enough rebound damping, you'll want HD's, or preferably Sports (or OE Sportline, or KONI). With stock springs, either use Comfort, HD, or KONI. I would never recommend KYB, they have a reputation of wearing out in 25-50kmi, where Bilsteins have a lifetime warranty and usually work well for 100k. KONI has lifetime warranty also.
4) Stick with the stock tire size of 195/65/15 on stock wheels. One of my favorite upgrades, which I highly recommend, is getting a set of 16x7.0 wheels from a W202/203/208 chassis, with 205/55/16 tires. These fit perfectly, look fantastic, and improve handling dramatically with almost no penalty in comfort. Photos of my car with these wheels are here:
http://www.meimann.com/images/mercedes/87_300D_white/
5) You need to replace your shocks no matter what because they are bad. I'd start there (with either HD's or KONI adjustables), immediately followed by the Sportline (or "Plus") sway bars. More 124 sway bar info is in the PDF linked below.
http://www.meimann.com/docs/mercedes/124_swaybars.pdf
