1991 300SE (W126)
I notice my passenger side front wheel felt out of balance, When I hit speed bumps I can hear a "clunk" sound comming from from that wheel...also I can rock the wheel forwad and backward when parked and hear a "clunking" sound...does this mean I have a bad lower-ball joint???

Probably not. But you do have something loose, and that's not good.

I also noticed grease comming out from the center hub/bearing...

That may be the definitive symptom...

BAD or DAMAGED Wheel Bearings/Races.

I WOULD NOT BE DRIVING anywhere other than the driveway...
AND even then ONLY less than 1 MPH.(For less than 5 Feet)

In fact I'd do an R+R on both front wheel setups!

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'84 300SD sold
124.128

Thank for the feedback guys....looks like its time for new front wheel bearings!

I installed wheel bearing kits today...I used the instructions from the DIY section for W126 from this forum....instructions worked perfectly....car is driving so smooth again...Thanks again for all your advise guys

Wheel bearings or the guide rods are more likely than a bad ball joint.

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Yes u are right pawoSD...when installing the wheel bearings today...we realized the passenger-side guide rod mount/bushing was moving back and forth a bit thus causing the "clunking" sound...Can the guide rod "mount/bushing" be replaced with out removing the complete bracket/assembly?? Id like to replace just the guide rod "mount/bushing" if possible.