$3500 seems more than a little high to me.
Go to E-Bay and check out what you can get a rust free car for.
I've got an '83 300D without any rust at all, and a good interior. Paid $2000 for it 4 years ago.
Keep the oil filter, and the fuel filters changed (especially) and adjust the valves (this is critical to good winter starting and overall satisfaction) and it'll outlast your desire to drive it.
Also you might want to check out
http://www.mercedesmailing list.com.
Click on the archives section. It has an excellent search feature.
Enjoy