Hi Julian. I have tried to gather all the necessary info to do a V8 transplant into a W123 wagon myself, but I may go for a 380 or 500 engine instead, a 380 is 30-45 kg lighter than a 560, and a bit narrower from lower block height.
First of all: Start with an injected petrol engined wagon - 230TE or better a 280TE, then you have all the required hardware for the fuel supply built in.
Please note: All these notes are for LH drive cars, RH drives may have issues with for example the exhaust manifolds.
All the V8s will fit, but you may have to modify the wheelhouses slightly because of the width of the engine.(hammer!) It is basically a bolt-in, but it is a tight fit! If you follow the standard 560 exhaust pipe's path, the pipe from one side will pass over the bellhousing to the other side, you need to check for clearance.
The 560 radiator and overflow tank will fit, but you need electric fans, probably in front of rad. The 560 had a longer snout, as it came with a modern flat drive belt, the 500 engines in series 1 had single or double old style narrow drive belts, which are a bit more space-friendly.
The W123 was partly based on W116, the engine mounts have exactly the same distance between them. Use the engine mounts from a W116 V8 car with 3.5, 4.5 or 6.9 litre engines, they bolt right onto the 500/560 engine blocks, and fit perfectly in the W123 chassis.
The 560SE/SEL exhaust manifolds will give you problems, for necessary clearance use the ex.manifolds from a W107 560SL. For LH drives, the right side W107 manifold is absolutely necessary, I am unfamiliar with the situation regarding RH drives.
Use the front brakes from the 560; calipers, rotors and backing plate, W123 hoses will fit. Also use the brake booster from the 560. The larger rotors need 15" wheels. See this post: http://ozbenz.net/viewtopic.php?f=10&t=20625#p149851
The 560 has an electronic speedometer, W123 is mechanical, the W126 may fit the W123 instrument cluster housing, search the net for a solution.
If the air cleaner housing on the 560 is steel, you may save some weight by using an aluminum housing from a 500SL
You should be able to use the 560's transmission crossmember.
Use as much of the W126 driveline as possible, you will note the difference in dimensions.
The W126 series 2 differential housing don't fit the W123, but the entire rear axle cradle may be used with some modifications, you may need wheels with different backspace. For use on a wagon, you need a donor W126 with SLS. Try to find a diff housing from a W126 series 1, or from a W116, instead. They are larger than W123, but are bolt-in, and you can keep the W123's SLS rear suspension. The 350 and 450 W116s usually came with a LSD diff, all 6.9s had LSD. Depending on model year, you may have to search for fitting drive shafts, there are different versions. See also: http://mbturbo.com/lsd-differentials/ and http://www.peachparts.com/shopforum/diesel-discussion/289638-trying-fit-aluminium-w126-107-trailing-arm-w123-question-compatib.html
The wiring for the 560 will be your worst nightmare, nothing matches the stock W123 setup. You may use the purely mechanical K-jetronic intake system from a 500 instead, and I have also seen notes from frustrated souls going for a MegaSquirt injection system instead (using a BMW fuel rail), ideally in combination with a DIS ignition system.
For a faster steering, use a W116 power steering box and pump, they have a 14,02:1 ratio/ 2,7 turns, the W123 has a 16,55:1 ratio/ 3,2 turns, the 560SE has a 15,06:1 ratio/ 3,03 turns
I'll add conversion info to this thread as soon I find it, I suggest others do the same.
In the mean time, here is a nice 280TE 5.0 to drool over:http://www.kiezkustoms.de/w123280TE5.0500TE560TEw123M117V8.htm
Olaf
Statistics: Posted by Olaf — Tue 07 Apr, 2015 2:36 pm