It has 69,000 miles and the engine sounds like a diesel. I changed the oil to 20w-50 which made it quieter but the knocking sound still persists under load. The oil I removed was mobil1 0w-40 with 100 miles on it, and it smelled like exhaust and was black, the gas mileage is about 10 mpg, and pretty sluggish.
Do these engines have problems?

 

These are some of the most reliable engines MB has ever produced. This is definately not normal. Changing the oil viscosity to try to mask the problem is a fool's errand. Get it to a competent mechanic asap before it's too late.

 

Thank you for your reply. The thicker oil was only to see if excessive clearances were causing the noise. I did go to a mercedes dealer. They told me the noise is caused by the vapor recovery purge valve, and is normal.
I am not convinced. It seems Mercedes would be embarrassed to produce such a noisy thing. I know of many cheap old Hyundais with 200,000 miles that run quietly.
On the 100 miles trip to the dealer it got 22m.p.g. in mixed driving, so the thicker oil may actually seal the cylinders better. It could be 0w-40 is just too thin, and Mobil 1 may create slug wich could lead to a noisy engine.