I have posted previously about the fact that I recently purchased a Mercedes 300SD which has some oxidized paint on the hood, however I have another development now. I noticed some white splotches on the hood and realized that there is some sort of clear coating on my hood that is starting to actually peel off. The coating is clear but the parts of the coat that are lifting away from the paint look white once they actually seperate from the paint, and flake off rather easily.
I have never seen anything like this on any other car. What type of coating is this? Is it possible the previous owner used some type of paint sealant, heavy paste wax, or polish that is now coming off?

 

It sounds like it could be some serious acid rain damage, organic damage (bird poop and bugs) along with oxidation, and general neglect. Anyway, there's no way you can repair clearcoat that's peeling off. It needs to be resprayed.

Absent respraying, the best you could hope for is to stop further damage. I would wash the car, then use a clay bar, then polish it, then wax it.