It's a fact of life that the E500E (with cooling system in good working order) runs overall a bit hotter than other 124s. This is exacerbated in hotter climates/seasons and particularly when the A/C is running and/or the car is running hard at high speeds. I lived with the E500 in a moderate climate and NEVER saw temps pass 100C. In the MUCH hotter climate of Houston, I have seen it pass 100C many times when ambient temps get much north of 85F, and definitely 90F or higher. There are a number of factors that contribute to the higher running temps of the E500E, but a lot of it has to do just simply with a big engine in a small space, with less space and reduced airflow in the engine compartment. To this end, owning a 560SEL and 560SEC, I also see the larger frontal area of the 560SEL (larger grille, etc.) reduce the running temperatures a few degrees over the lower-hood, smaller-grill 560SEC coupe....
In my opinion, BOTTOM LINE, the E500E in proper order should really not go much above 100C, EVER. However, anyone who tells you that their car stays 100% of the time between 80-90C (unless they live in a very cold/mild climate) either is not telling the truth, or has something wrong with their sensors/gauges. A working cooling system should keep the car in most all situations (i.e. hot climates) between 90 and 100C, with PERHAPS a rise above 100C if the car is standing for a period of minutes in traffic (i.e. a long traffic light, or traffic jam) with the A/C on a hot day that is say 30C ambient temperature outside. In my view, 105C or higher is definitely out of spec and indicates that work is needed.
This does not apply to the 6-cylinder engines. A properly working 6-cylinder cooling system on the 124 really should never go above 100C even on the hottest days, and even in standing traffic. 90C is pretty normal for the 6-cylinder models in everyday driving, standing traffic, and high-speed operation even in hot climates.
Yes, there is extra "zone" between the 100C and 120C mark where the car is not supposed to consistently run, but it's also OK in certain situations or if the cooling system is not operating 100% up to spec. But all cars have this "safety margin" before the red/danger zone, not just MB. But just because there is safety margin, doesn't mean the car should be operating there consistently. It just means there is a bit of overhead before things get critical. The rule of thumb is that ~90C is normal, and in hot climates/seasons anything below the 100C is acceptable; anything over 100C and it should be an indication that the system is not working up to spec/as efficiently as it should, or it's a REALLY hot day and you've been sitting in traffic a REALLY long time....
Cheers,
Gerry