I just recently bought a 1980 Mercedes 240D from a garage. What got me really interested in it was that it had been an old Hollywood rental car back in the 1980's. They claimed it was running very well until the guy that owned it NEVER got the oil changed.(an idiot I know) I bought it for $1100 including towing. The interior is spotless and perfect and there is just a bit of rust on the bottom. I personally know nothing about diesel engines but bought a few books and watched many video's online.

Once we got the car to the house we instantly went and bought a battery since there wasn't one inside. Immediately after hooking up the battery everything electrical worked like brand new. The heat, lights, windshield wipers, etc. So we know it isn't an electrical issue. We drained all the disgusting oil out, put new oil in and replaced the filter with a brand new one. We then replaced all the glow plugs which were very burnt out. The glow plug light inside the car comes on for about 5 seconds before turning off so those are all set also. The next thing we did was replace all the fuel lines(?) on the engine. The ones that are rubber on the inside and kind of fabric like on the outside. The problem is there is one at the very end near the windshield that doesn't seem to connect to anything. Its the one with the circle around it in the picture. Yesterday I went out to try and start it again. Usually it made a constant noise like it was trying to start up but this time it sounded awful. It sounded like someone was using one of those old 2 person saws. It would get slower and slower and the gas meter would tweak out. Once I saw it do that I instantly stopped trying to stop it. I went out and took off the engine cap and what seemed like steam started coming out. It didn't smell like smoke or anything just diesel.

Does anyone have any idea what could be wrong with it and what goes on that last spot i circled? It would be a big help. Thanks
(Some pictures of the car also)