My 86 560SL surges up and down about 200-300 rpm when rolling down hill at above
about 80kph. Idle is smoothe, but a bit high at about 900rpm. Following earlier suggestion, I replaced the idle relay, but that had no effect. Where do I look next?

You will need to identify the reason why the car is idling so high. The idle system can only control the air flow through the valve. If you were watching the control of the valve you would probably find that the valve is being held maximum closed duty-cycle (around 70/30). It would be in that state if the air getting in the motor plus the minimum through the valve equals more than the idle speed listed on the emissions sticker on the radiator support.

The idle valve also might be stuck causing the same condition. If the throttle is partially open and the idle switch closed the valve can't control it either.

The condition you are getting is called decel cut-off. It occurs above a certain speed when the rpms are above a certain level with throttle closed. The fuel is shut-down till the rpms drop below another threshold where the fuel is again restored. If enough air is getting in the motor when fuel is restored the engine speed again raises over the threshold.

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Steve Brotherton
Owner 24 bay BSC
Bosch Master, ASE master L1
26 years MB technician