First things first, welcome to Benzworld!
These cars will go forever, especially the Diesels, that is if they are maintained well. Any W123 can either be a garage queen like mine or a daily driver. It depends on your needs and how much you are looking to spend on a car. These cars, particularly when having been neglected are a bit needy of a few things. Remember they are OLD, so they have problems here and there.
I try to look for things that might be a risk to the overall safety. Make sure all the basic stuff works and document what needs to be repaired or replaced. When buying one of these check to make sure the engine is in good shape. The timing chain should be replaced about every 90k miles, (both chain and tensioner), adjust the valves ever 10-15k miles. Look for any signs of rust or damage to the frame rails etc... A lot of people neglect this but make sure the suspension is aligned right and the wheels and tires in good shape. I almost got in an accident when I had a wheel come loose on me.
Try to get a car that has all or most of it's service documents. That just helps with knowing how well it was maintained.
I'm not going to go into detail here but use the search. You'll find out lots of stuff.
Here are some other things to get you going on W123 Diesels:
MercedesShop - Mercedes Benz Parts and Technical Information
Fixing or Replacing that Annoying Fuel Sender
Mercedes-Benz W123 - Wikipedia, the free encyclopedia
I personally love the 240D because it came with a manual transmission. It may be slow as hell (no turbo) but the MPG is great. The automatics can be a bit rough and I prefer an stick because I have more control over the engine and speed of the car etc... It'd be nice to have an extra cylinder and a turbo for getting on the freeway but overall it's a fantastic car.