What are the most significant mechanical problems that you might encounter on a M104 engine. I am very familiar with the M103 engines since I currently have 2.

For instance valve stem seals, head gasket.

Head gasket
engine wiring harness
Throttle actuator
Mass air flow sensor

Valve seals and guides are generally not a problem on the M104.

Not so significant:
ignition coils
EGR valve tube clean out

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dtf
1994 E320 Wagon (Died @ 308,669 miles)
1995 E300 Diesel (228,000)
1999 E300 Turbodiesel ( died @ 255,000)
2006 Toyota Tundra SR5 AC 4X4 (115,000 miles) rusted frame - sold to chop shop
2011 Audi A4 Avant (165,000 miles) Seized engine - donated to Salvation Army
BMW 330 xi 6 speed manual (175,034 miles)
2014 E350 4Matic Wagon 128,000 miles
2018 Dodge Ram 21,000 miles

I don't know of any purely mechanical problems other than the headgasket and accessory problems such as the wiring harness, air mass meter, and occasional throttle actuator. I have yet to hear of a bottom end ever wearing out. The M104 unlike the M103 does not have any valve guide or seal problems. Aside from the headgasket problems, I would say its about as good of an engine as Mercedes has ever constructed.

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Ali Al-Chalabi

2001 CLK55
1999 Dodge Ram 2500 Cummins Diesel
2002 Harley-Davidson Fatboy
Merlin Extralight w/ Campy Record