Hi there, Im just back from my mechanic. My '87 760 although not a turbo but a GLE, had similar problems, including, hesitation, no power and hard starts. We started with the oxygen sensor, way back in December, then Wires in Jan. Finally, after several tows, I almost gave up. In Sept, we did a tune up, including original, plugs, wires, Distributor cap and rotor. After about 100kms, I had the same hesitation prob, and this time we changed the fuel filter. Complete fuel system clean @Mr. Lube. It worked well, but not much power. Last week, I took it in for engine and transmission oil change and a muffler job ( requires two mufflers). Guess what? Not much power and still high fuel consumption ! We finally figured out today, that the Catalyctic converter was clogged. Spent another $330 to replace it ( labour incl)...and I have a new car !!!. Runs great.
Your problem could be with the Exhaust system.