Problem seems to be solved
 

'90 300E

As per my previous post "No good duty cycle reading, misfire, etc".

Today I removed the EHA and turned it 1/8 of a turn clockwise. After reinstalling and tweaking the CO mixture back to around 50% the car ran amzing. Heaps of acceleration, much reduced misfire, and the best part, no smoke from the back at all. All I could smell was steam. There is still a very slight misfire from idle to 2500RPM. I'm thinking of turning the EHA another tiny turn maybe between 1/8 and 1/16 of a turn to completely eliminate the misfire. BTW, I checked the Air Flow Meter and it checked out fine. Does all this point to a failing fuel distributor?

Anyway, thanks to all who helped so far and I hope this post can help others.
If anybody has any questions feel free to e-mail me.

Thanks, Andrei