dont know if i should use a product called steel seal to fix the gasket. it mixes in with the oil
has anybody used this product please advise. cheers

sounds like its time for a headgasket replacement.. Most cheap "fixes" like that are just band-aids and the problem will come back..

You wont be solving anything with an additive. While it is possible that a head gasket is out it is more likely that the radiator trans cooler is leaking.

#1--determine if it is trans fluid or engine oil in the coolant. It can be difficult to tell. trans fluid=rad cooler Oil=head gasket

thing that baffles me is the oil level hasnt dropped and had the trans oil checked and all is fine. i am asking myself (hoping) could a previous owner put oil in the expansion tank in error.
I had the coolant replaced and it was clean. just the expansion tank is a little gunky

What is the mileage of your vehicle? Most M104 engines require head gasket replacement about every 70,000 to 100,000 miles. You do not have to do a complete head rebuild to fix this problem. The parts are affordable but the job is a little labor intensive. Take a look at the link below for a great step by step DIY article on replacing the head gasket.

http://www.peachparts.com/Wikka/M104HeadGasket

my car is a 1998 with only 64,000 miles with full history. i asked mercedes head office directly was there a design flaw with the gaskets and if i was to buy new oem gasket from the dealer was it it a modified version of the original installed in my car. they said there was no known faults with their gaskets and any modifications are confidential to the public. I told them my mb dealer said it was a common problem. they could not comment on what was said to me as they wasnt party to the conversation. suprise suprise. i cant justify spending shed loads on the car is its worth is now a bag of toffees. I said to mercedes they should reduce parts and labour servicing costs as the car gets older to carry on past the 3 year reduction they offer until they are competitive with independant service garages. heres dreaming!