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It could also come from the flange gasket below the manifold- there are 3 16mm nuts holding that on, and it's only a couple bucks for that big metal gasket.
Really the only other place the noise can come from is valves being out of adjustment, and if the machine shop didn't take the cam out, I doubt the valves are out of adjustment. You didn't say what, if any, work had been done to the head, though, so I can't really guess one way or the other.
The timing being off wouldn't affect valve noise, though it certainly can affect exhaust noise- I was surprised how much when I set the timing on our 88 240 (it was WAAAAY retarded, apparently an attempt to pass the emissions test.)
The car also had exhaust leaks, so it was quite noticeable. If the cam was off 1 full tooth on the belt, it would probably not run, or run so poorly that you'd immediately know something bad was wrong. If the marks are close, it's probably right. I know they're hard to see sometimes. However, the distributor on an 88 can be adjusted a lot, to set the ignition timing virtually anywhere in a wide range. So double check yourself and see what you come up with. Note that the belt markings never line up once it's been run one time.
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Rob Bareiss, New London CT ::: '87 244DL/M47- 221K, 88 744GLE- 202K, 91 244 181K, 88 244GL 145K
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