Head gasket???
 

Working on my 87 560SL and just got my intake manifold off and noticed coolant in cylinder no 4. Is this a bad head gasket or due to the intake manifold gasket being bad? I was really surprised because I hadn't noticed any smoke coming out the back and it was running pretty smooth except for the high idle issue. I'm just a hobby mechanic and felt comfortable with the intake manifold but I'm not sure I want to take the head off. I'm definitely not going to rebuild it! Thoughts or suggestions? The yellow arrows in my picture show where the coolant is.

On the M117 it is usually a sign of intake gasket leak. Consider yourself lucky. Many times when the gasket leaks, those rear manifold bolts seize and snap. I had three snap on my 1985 M117. I got lucky and got them out by welding a nut on the stubs and soaking them with penetrant.

This type of leak is common regardless of the brand of car.

You will need to clean both surfaces but don't try to "file" the down. The goal is to clean out the pits, fill them with epoxy ( like JB weld ) and sand lightly to bring the epoxy to the same level as the metal.

When installing the gasket, it is a good idea to _lightly_ coat the area around the coolant passage with silicone sealer.

I can't emphasize this portion of his advice enough! The key word is "lightly"

Clean the threads with a tap. Go gently. Those are alloy heads and it is easy to mess the threads up. If the bolts look "iffy", replace them. Use a torque wrench when you re-install the manifold.

Use Never-seez or its ilk when you re-assemble.

Yes, a thin film wiped across each surface will do the trick, the goal is to seal up any spots that the gasket can't. ( low spots, roughness )

When 2 nearly flat surfaces are bolted together, that tempting huge 1/4" bead of silicone will squish out and end up floating around in whatever you are trying to seal.