I'm in the same situation - having invested in the repair manuals for my 1993 300E 2.8 (157Kmi), I was also presented with a quote for head gasket replacement (also $1500), plus spark plug wire harness and engine wiring harness replacements and told I needed a tensioner block pulley. The total for all the required repairs was over $4000, not including the other repairs I need to have done (radiator grille , antenna motor, motor mounts, WOT assembly, most of which I was planning to do myself)

I love the car, but I'm afraid it might have to be replaced with something a little newer and a little less expensive to keep up.