[V-16]

Good choice buddy. Will try to answer your questions below. But why only a diesel? Do you cover a lot of kms per day (lot of means if its below 200 kms a day, the diesel choice is not justified.)
Contrary to popular belief, my E220 turned out a very healthy 12.75/km on my trip to Mahableshwar and back.

HOW MUCH TO PAY? This depends on the condition. I have seen prices of a car with your specs go for as little as 4.50 and max 5.75 very recently. The latter was in better shape than most new cars we see and had clocked only 27K.. unbelievable but true, so look around and dont go and pay a deposit for the first car you see.

Which dealers to trust None. Look up the classifieds, especially the Times Drive. I always see so many of these cars featured there. Also ask friends and you may come up with a very good car. Dealer cars are usually overpriced and only look good cosmetically. Most dealer cars wil also feature a fiddled speedo. Look for the tell tale signs of high usage in that case.

I don't have a covered garage or parking space - how can this be countered or will it cause big problems? No Problem. Get a good Car Cover. Problem solved.
You're righ tabout the parts and the service costs. The service costs can go down if you use regular oil as opposed to Synthetic but I use synthetic always. The spares are available apenty and are not so expensive. ( Some of Honda city's spares are more expensive)

Have an authorised Mercedes service agent look at your car. Sanghi or Auto Hangar will do it for you for a small fee and even give you a report.

And when you get your car, drive it every single day as far as possible. Do not let it be your Party or weekend car Daily driving this machine further refines it and will make you one with the car.