I confess that I haven't read all the details posted above, but here are my observations from owning two E320 Coupés, the present one for nine years (a 1996 model bought with 19k on the clock from an MB dealer in 2000):
* The rear screen delaminates and costs £500ish + labour. Many choose to live with it, as I have, as it doesn't seem to get much worse after its first development. There is a risk that it will foul up the demister heater if it goes too deep.
* Being a W124, the front wings will corrode and need replacing, unless you are very lucky. About £200 each primed from MB, plus bodyshop costs (available from Beevers and others at less than half price, but quality and fit have mixed reports).
* Mine has persistent corrosion around the antenna aperture. £400ish bodyshop job every several years.
* Mine has incipient corrosion on the back edge of the sunroof aperture, but you can barely see it as yet.
* I seem to be one of very few whose wiring harness has yet to fail.
* Head-gasket failure is common, although mine has yet to go at 62k on the clock. £600+ job at an indie, and few heads don't need skimming (£100ish). Both my M103 engines have had to be fixed, but at higher mileages; M103s and M104s tend to fail in the same place: left rear of block, looking from the front. Timing-chain cover goes too, although not yet mine.
I've had no mechanical problems in the nine years of ownership and 45k done, with the sole exception of drive-train vibration. I had a damping block fitted, but my mechanic now reckons that the UJ at the front end of the rear half of the propshaft is the culprit, with too much play in it, even at the modest mileage. I've given up on the two breakers I've contacted about it and shall be selling a few shares to get an OEM replacement for about £500 -- such is my willingness to invest in the future of a car I can't envisage selling. Thus, I remain wedded to a superb car that I will continue to invest in. I'd rather do that than suffer the depreciation on a newer plastic/electronic job. It will probably outlast me.
P.S. The asking price doesn't seem extortionate for a superb specimen from a specialist dealer. Dealer or not, get an independent inspection by someone who knows the model intimately. And for insurance, try RH Specialst Car Division; the price you quote seems too high.
P.P.S. "The reason was a change in Mercedes paint technology from a solvent based system to a water based system."
This didn't start until August 1995.