Id go with the simple things first. Change the oil filter and oil, spark plugs. If it still seems the same it may be something bigger. My dads car sounds exactly like yours. Its even a 1989 300TE. It used to start out in 2nd gear cold very well. Then when it was warm, it still starts in second but feels like it wont move. The sluggishness came from an engine that needed a complete overhaul. Simple as that really

Christian

1989 300TE
1994 E280

Thanks for advice guys. Here's what I've done since last update. I replaced both fuel pumps and it appears it fixed the sluggish problem 90% of the time. One of the fuel pumps was pretty noisey. Anyone have suggestions for getting rid of the sluggishness 100%?