I have a Mercedes 300d 1981 I just bought. It shifts hard, chips tires into second .?

The transmissions on these cars can tend to shift hard, it may or may not indicate a problem. The first thing you want to do is check out the vacuum system...a leak anywhere can reduce vacuum at the modulator. I like to replace all the rubber connectors and "Y"'s before I even start to diagnose a problem like this.

http://www.dieselgiant.com/mercedesvacuumtroublesh...

When you are certain the vacuum supply is ok, follow the workshop manual procedure to adjust the modulator. Finally, check the vacuum switching valve on top of the valve cover. If the lever arm is broken, replace it:

http://www.mercedessource.com/node/2331

Your knocking could be many things. First of all, your valves should be adjusted annually. A noisy valve is actually better than a silent valve, as the clearance will tend to close up (and quiet down) until you ruin a cam. It could also be a noisy lift pump, which isn't a problem. Or it could be a sticky injector:

http://www.dieselgiant.com/Bosio%20nozzle%20before...

You need to replace your blinker switch.

For the shifting, have you checked the fluid level first of all? Assuming it's the correct level, start checking the vacuum. Don't overlook the control valve by the injection pump and the 3/2-way valve mounted on top of the engine valve cover.

Regarding the tapping noise, the valves are adjustable and that is part of the maintenance schedule for that engine.

Up to 1981, the hazard switch is also the blinker relay (from '82 there was a separate relay). That is the red triangular button.

The relay is probably bolted to the steering column bracket near the firewall if my 1983 S class is any guide. There is likely to be a lot of ground wires attached to the same point. You can get at it through the instrument pod which you can pull out by inserting two pieces of coat hanger wire about 4 inches (1cm) long with hooks bent one end. You may have to disconnect much of the pod so take notes or a photo.

Replacing the relay is tedious but it can be done. You will need a socket set with a drive at least 6 inches (15 cm) long.

Also make sure all the in-line cable plugs and sockets are tight. That was the fault with the blinkers on mine, replaced the relay and it made no difference. If your hazard flashers work the relay is OK, it is the connection between the blinker switch and the relay, or maybe the switch itself.

Vinnie is likely to be correct about the modulator but there is the possibility that one of the pistons in the transmission may need replacement. In some MBs this can be done without removing the transmission from the car.

Had a similar problem myself years ago.

The hard shifting is caused by a bad shift modulator, or the vacuum line came un dun that runs down to it. the modulator is on the drivers side of the trans, and has a black round cap on it. ( not sure how you got 4th gear out of a 3 speed trans ) The valves are adjustable and should be every 30k miles. The blinkers, you need a new hazards switch, yes it is that red button.

Remember it is a diesel, they offer power at the expense of refinement more often than not. Perhaps it just lays down too much go while in 2nd for the tires to manage. It could also be you got old tires with not much tread left, use the penny trick to see how much rubber you got left. Stick a penny in Lincoln head down and if you can see about the top of his head your tires are too worn.