Congratulations with the W123.
I'm a huge fan of these cars. Last properly all in house designed and engineered car of Mercedes.
I own a 1982 W123 200 (so just the petrol version), see my garage.
The weakest points of any W123 is rust. Actually, I found rust on my German W123 a bigger problem then on my Italian Alfa Romeo.
Noticeable weak areas are the four jack points, the bottom of the doors, the sills and inside the engine compartment the areas around the hinges of the hood. Also, the rear windows might leak might leak into the boot and you will find rust there as well.
Although, typically relatively easy to fix, it does take time and money.
Mine also has a sunroof and that is the pits, rust wise. The drains are simple tubes, 4x, running from the corners of the sunroof base down into the chassis. The drains get clogged, tubes burst/disintegrate over time you will have rust everywhere near those drains. (its one of the reason for the rust on the jack points as the drains end up very near to them. Looks like you dont have the sun roof, I hope rust isn't an issue with yours.
The one thing nearly all W123 suffer from is play on the steering wheel. Mercedes specification allows 1 cm play at the circumference of the steering wheel. You can adjust the steering gear box, but only so much. You overdo it and you might find yourself in a situation of the steering locking up on you. Not a good place to be.
I took mine out and had it properly overhauled and restored to original condition and specifications.
Not sure if it applies to your car, but a lot of these W123 have a pneumatic system for the door locks, head light adjustment. the auto boxes uses pneumatic vacuum as well. Over the years especially the vacuum actuators, especially the rubber parts just disintegrate and you need to replace them. Original Bosch parts are still available and you can change them all out yourself easily on one afternoon.
My son bought a W123 a few years ago and this is the very first job we jointly undertook.
Other then the above, these cars, especially the diesels, are just about indestructible! The were extensively used as taxi in Germany and Western Germany. When I grew up, every taxi was a Mercedes W123. Some clocked up phenomenal mileages. Even today there are a few original W123 Taxi driving around in a few German town.
My W123 sits at home, in the Netherlands in my garage these days. I keep the battery on a trickle charge. When I get home, the first thing I do is put the battery back in. She has never failed to start first time even after sometimes sitting idle for over a year. And even after 34 years she still drives as new. Not very fast, but very comfortable, no rattles, no squeaks.
I dont have my W123 manuals here with me in Delhi, but if you have any technical questions feel free to contact me. I can get access to most technical information via my W123 clubs
There are quite a few interesting books on the W123 as well.
This one I would rate as the best most comprehensive:
http://www.w123book.com/
Lots of technical documentation, workshop manuals, technical bulletins are available on the Internet. Quite a bit in German, but plenty of English version out there. I have the original American workshop manuals for my car and my engine. These alone are a joy to own and use
Enjoy
Jeroen