In regards to an engine replacement that's not really an option. And yes, the car is practically free at $500, mint interior and the exterior is really nice too. The wiring harness was replaced immediately after the current owner bought the car.
That's what I figured, the interior alone would cover the expense. I may be trading my 78 300D for it if I don't just pay cash but we'll see. I have yet to do a compression test on this w202, I know it's going to be low but it's doubtful that it would be on all 6 cylinders unless the head bolts loosened up, the head warped or someone really beat this car to death. If there's excessive wear I'm walking away but if not I'm going for it.If for any reason you couldn't fix the head gasket, you could part that car out for way more than $500. If the wiring harness is as new as you say, you could get your money back with that part all by itself.