Correct, it will eat up those parts. It sounds like it is a pretty bad leak, as well. Since you have another car to drive, forget my earlier suggestion!
As for machining, it all depends. If it got hot enough to warp the head, by all means it must be done. If it is due to corrosion from old antifreeze, oil, etc. then it may not be neccesary. I would take it and have it checked at the very least.
http://cgi.ebay.com/ebaymotors/REPAIR-MANUAL-CHILTONS-1974-84-MERCEDES_W0QQitemZ320174810896QQihZ011QQcategoryZ34227QQssPageNameZWDVWQQrdZ1QQcmdZViewItem
Here is a link to a cheap manual that will cover this car. These are not as good as the factory manuals, but I think it has enough info to get you through the jobs you are doing. I keep one in the tool box mainly for quick reference for torque specs, capacities, etc. It says it only goes to '84, but the 190D 2.2 changed very little (egr valve, etc.) in '85 so the info is still relevant to your car.
I have an original OM601 manual, but they are few and far between. Keep your eyes on ebay!
Klaus
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‘84 300TD “Mountain Goat”
'62 300d Adenauer-350 Chevy
- "Max"
'15 VW Passat TDI
'16 Dodge Ram 3500 - Cummins w/6-speed
'68 Mustang fastback
'55 T-bird
‘63 Studebaker Hawk