Mercedes was having issues with that motor, they already phased it out after less than 4 years. They are now using a V6 CRD.
The problem I came to realize when looking for what diesel would be best in a D2 made me realize that there really isnt a good one at an affordable cost. To be able to comfortably cruise on the highway and have enough power in town is important to most D2 owners, as a D2 is not an RRC and is usually a truck that people drive around, not a dedicated trail truck. The only diesel that I think would actually be "fun" in a D2 and economical would be a brand new crate Cummins 4 CRD. The 4cyl version of the 04.5-06 Cummins 6 CRD that comes in the Rams. This motor is only put in freightliner step vans and some new ambulances. It is higher revving, and very economical. Its more powerful and peppy than a tuned 4BT, but you get great mileage too. Only problem is that its a $15K crate motor. The D2 body just does not work well with the 6BT or 6 CRD Cummins, and besides one of those, you will not like the road manners that you will get with any of the other current diesel options that fit into a D2.
That is why I am putting in an LS2. 450hp, and I'll get better gas mileage too since the engine is much more advanced. And it will still pass emissions. Plus, the fun of 450hp far outshadows the mileage of a diesel. I still think putting a basic SBC into a disco is a dumb idea, but the LS2 is such a well built engine its worth it.