I have been looking around recently and I have just bought a W124 E280 Estate, it has two owners, less than 160,000, AirCon, leather, power seats and all the usual goodies.
Full Service history, (MBZ and Indie), last owner 140,000 and 12 years
No real rust and in good nick, just the odd bit to do, needs a new set of wheels. I had a budget of £2,000 and paid less for mine.
But as one of the experts said, on the Auto something video, good ones in the middle price range are now hard to find.
I saw this on EBay, which may be better value as it is with a dealer and maybe he will reduce the price
http://cgi.ebay.co.uk/ws/eBayISAPI.dll?ViewItem&ssPageName=STRK:MEWAX:IT&item=110340923422
I have no connection with the add.
I would say that the car you mention is well overpriced considering that it is a private sale and not from one of the "good" W124 dealers