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It sounds like you may not have gotten all the air out of the system before starting the engine. You don't count turns of the steering wheel - you have to observe bubbles as you turn and keep doing it until there are no more bubbles. It can take many turns to do that. The system won't bleed itself. Now that the fluid has foamed, you will need to let it sit overnight, then bleed. You may need to do that 3 or 4 times until you seen no bubbles.

 

Thank you very much for advise. Did one additional bleeding. Didn't see any small bubbles. The only thing in between one steering wheel rotation fluid would rise to the point of overflowing, where I would stop just short of it and it would go down quickly, so I would continue with rotation until another rise of the fluid on next turn. Is that a "big air bubble" that rises the fluid and subsides after escaping or it is some sort of normal pump action to overflow normal fluid level on engine off. After this one bleeding although not a big difference I think it is "lighter" on the low RPM turns and whining possibly slightly less prominent.

 

You shouldn't see such a large volume change like that. It's either a lot of air, or a problem with the rack.

 

An update on power steering issue. On cold engine there are no bubbles. I tried to bleed it anyways just to be on the safe side. Raising fluid level was me having filled it too high, so scratch that on my mistake. PS starts being noisy and heavy is only after driving for a while and on lower RPM. So now I am thinking replacing PS pump might be the last resort. Any suggestions? Thanks

 

Finally problem solved. I hope it would help someone that has similar issues, as in both Benz forums good advice is drowned in sea of similar but not related posts or simply is wrong and sometimes even incompetent.
Most W164 PS problems with symptoms like mine (hard steering, whining noise are attributed to three issues:
(1) PS reservoir, (2) rubber gasket, (3) bleeding the system. And rightly so. It is the most inexpensive and most common solutions. Parts are cheap (below $50) and it takes 30-60min to fix and bleed.
I can understand that's why some PS pros on this and other forum insist on these solutions. But there is one more variable - mileage. If above 100K the solution is leaning heavier towards PS pump replacement. Sure you can start with above three, and if there is no change - replace pump as well. Like in my case dead giveaway was that whining noise starts when pump warms up. Reservoir/gasket replacement and manic bleeding only made minor improvement if any.
Pump replacement fixed the issue and PS is silent as in new car.
I opted for Bosch rebuilt pump. As a precaution replace inexpensive rubber ring every time you disturb the PS tank/pump connection (for example you tested newly installed reservoir/gasket and decided install pump later). This connection is prone to leaks, and use only OEM gasket.
Pump replacement is not complicated (but messy). If you can replace the reservoir, you can replace the pump. Remove fluids before starting. You don't have to but I replaced hose and couple of clamps as well. Contrary to some suggestions, cooling fan does not need to be removed. Even serpentine belt could stay on (take pictures just in case), but needs to be loosened with long wrench on tensioner. Good luck.