This is from a write up I did on my W123, I think the only difference may be 
the tool that you use to poke in there to release the tumbler, the w126 may 
require a two prong tool which has an steep angle towards the middle on both 
sides.  Hope this helps.
 
This past weekend I replaced the ignition tumbler in my 82 300TD.  I was 
surprised that the write-ups that I found on the Internet were almost all for 
the w124, the series after mine, which use a different tool and has a different 
process.  It is really very easy.
 
I used a hair pin, one of those symmetrical ones with all the plastic removed 
from the tip, or you could use a pin, but you need very stiff wire.  The w123's 
have a single hole on the face of the tumbler where the key goes in.  By 
inserting the wire in there, after turning the key to position 1 you release a 
protrusion from the tumbler.  You can find this hole by putting the key in and 
turning while gently pushing the hair pin in towards the tumbler.  After you 
push the pin in you can pull on the key which will release the tumbler.  The 
tumbler will come out about an 1/8th of an inch.  At this point you will be 
able to unscrew the black cover that goes around the tumbler.  There is a 
special tool that is used to get good friction on this heavy metal cover as it 
is smooth and can be hard to get started.  I did not use this tool.  After this 
cover is unscrewed both the black cover piece and the tumbler will come 
completely out. You basically just reverse the process to get it all back 
together.  Taking your new tumbler and putting the black cover over it with the 
pin in place then inserting this all into the ignition assembly. You then screw 
the black cover back on until it finally is far enough in that the spring 
loaded protrusion pops out and stops the cover from turning. Finished.
 
Hope this helps someone with this job.  If you wait too long to do this, until 
the tumbler fails it is very expensive and time consuming to have to drill out 
the lock.
 
Regards to the list,
 
Dan Elliott
82 300D-T 92kmi
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