I'm no expert by any means, but I have a bit of experience with the OM617.95x (the .950 in my 116, the .952 in my 123, and a little work on my friend's 126 with a .951). BTW, all Mercedes diesels use the letters "OM" ("oelmotor") to distinguish them from the "M" gasoline engines. Also, IIRC the OM617 began being offered in the W116 in 1978, not 1977.
My two M-B's are as follows:
W116.120 - 1979 300SD. Mileage is completely unknown; the speedometer/odometer was replaced at some point in the car's life. The current odometer reads 300,000 miles, but I think the car's closer to 200K. I've only had this car for three months and less than 1500 miles, so I'm still getting to know it.
W123.133 - 1985 300D (federal emissions, so it lacks the "particulate trap" that California models were equipped with). Mileage is now at 283,000 miles, on an original and un-rebuilt drivetrain. Other than a few minor changes (notably the lack of an EGR valve on the W116's engine), the engines in the 116 and the 123 are identical. Nearly all of my "review" is based on my experience with the engine in my 123, but this essentially applies to the 116 and 126 diesels as well.
I would say that the 617 is not a race-winner in stock form. However, I wouldn't call it a slowpoke either. If you know how to drive it (i.e. realizing that all of its power is in the higher RPM range and that flooring the pedal is what the engine wants you to do), you can get reasonable performance out of it...not breakneck by any means, but you won't hold up traffic either. I believe an article reviewing the OM617 turbo stated that its 0-60 mph (or 1-100 kph) time was 20 seconds. The occasional Italian tune-up does wonders for clearing soot out of the muffler

More importantly, a properly maintained OM617 will do well on fuel. I haven't driven my 116 enough to get proper fuel economy numbers, but my 123 averages 25 miles per U.S. gallon. I have never gotten below 24 mpg unless there was a problem (once when I had fuel leaks, and another time when my a/c compressor was going out), and on a straight freeway run, I can get 30 mpg out of her. I'm hoping for similar numbers out of the 116. IIRC gasoline M-B's generally get in the high teens for fuel economy, but I can't speak with any authority.
Mechanically, the OM617 is a marvel! It would not be unwarranted to refer to the engine as being rock-solid reliable. I have had my 123 for 60K miles (purchased at 223K miles, and it's at 283K now), and the car has never left me on the side of the road (which is far better than I can say for any vehicle I've owned prior, and I've also owned the 123 for almost double the mileage of any vehicle I'd owned previously). In fact, the only engine work I've done other than routine maintenance is a thermostat replacement. I also opted to flush the cooling system at this time. I have had to do other work on the car, but that was all specific to the W123 chassis, so I imagine it would be of little interest to most people on here. I have found, however, that the car in general and the engine in particular were clearly designed with serviceablilty in mind. Other than a Volkswagen, these two M-B's are the only non-American vehicles I've owned (other vehicles were one Chevy, one International-Harvester, and two Fords {one of which I still own}), and I've found the two M-B's easier to work on BY FAR. The engineers clearly had this in mind when they designed the cars; they appear to have gone out of their way to make things easier to work on. One example is in oil changes, where they made it so you can do it all with one wrench.
As to parts...with the 123, I determined that the "Mercedes parts will break the bank" belief is a myth. Granted, one has to know where to shop (most of my parts purchases have either been from
www.mercedesshop.com or from
www.performanceproducts.com), but I've found W123 parts to not be much more expensive than any other vehicle I've owned, and the longevity's worth the extra price. Looking around online, I've found that W116 parts seem to be more costly than W123 parts, but time will tell there.
Unfortunately, I can't compare the 617 to any M-B gasoline engine, since I've never even driven (let alone done any mechanical work on) one.
I hope this helps with the quest some
