I would attempt to repair the 500 engine first -- most likely you have a cracked head or blown head gasket, and the gasket isn't a terrible repair. This requires some special tools, I think, to get to the head bolts (although maybe not).

Easy enough to pull the heads and have them checked, as you cannot drive it now anyway.

Shoudl be a lesson to you to not run these hot, you can toast a very expensive engine in short order.

Peter

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1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!