Hello. Great website here. I have a merc s320 cdi, 2006, w221 model. It has just done 120k miles. When driving high speed around 70-80mph, it will slowly start to lose power, this will kick in and out. Unfortunately I had a major transmission failure and have just had it professionally rebuilt, but the car has come back and the loss of power issue is happening on/off all the time now, it suddenly drops in/out and gives turbo surge. No lights on dash, car not in limp mode. No leaks visible when parked. Kick down when it works is very brash and it gears **** into low gears when braking. Everything else is tip top, no other issues, car is back with mechanic, to find out fault codes if any, but I think it's a needle in a haystack job.. Please help!

First of all you need to access the Engine Control Module (ECM) using suitable diagnostic equipment (Star, Bosch KTS, Texa, ...) connected to the data link connector of the car, in order to pull out all DTC's memored. DTC = Diagnostic Trouble Code. Then you will bu full informed about the root cause of the problem, and you will be able to repair & replace bad pieces and reset the ECM.
Let me know please about found DTC codes. I guess that in your case the turbocharger is responsible for engine losing power.
I had some cars like Mercedes-Banz, BMW, Audi, VW, ... with Diesel Turbo Intercooled engines which slowly start to lose power. The root cause of the problem was bad turbocharger.
Turbocharger checking & reparation instructions:
1. Engine stopped and ignition switch off. Check all pneumatic connections and hoses between turbocharger actuator = pressure unit for boost-pressure control, boost-pressure control solenoid valve, vacuum reservoir, EGR control solenoid valve, intake-manifold flap solenoid valve, EGR valve with throttle - part of intake manifold. Also the vacuum connection between tandem pump and brake booster. If you find something wrong replace parts. If not go to step 2.
2. Extract the hose of the turbocharger actuator = pressure unit for boost-pressure control part of turbocharger. Instead of the original hose you must place another 1 meter long hose with the same inside diameter, and then you check to inspire yourself the air from the other one extremity of this hose. The mechanical connecting rod of the turbocharger actuator must have a smooth and whole motion. If you can do that with your mouth, then you must replace the boost-pressure control solenoid valve. If you can not reach this with your mouth, then you go to step 3.
3. This is the most difficult work. The problem is that the soot particles deposits inside the turbocharger plugging the variable nozzle geometry mechanism = adjustable vanes of the turbine. If the turbocharger actuator is not able to adjust the turbine vanes the charge air pressure increase too much and ECU (engine control unit) go in "limp mode" = engine protection software. As a result the "limp home" mode engine still running until you turn the engine off (ignition switch off) and back on when the "limp mode" is deactivated, but the fault still remain in ECU memory!
4. You must be able to extract the turbo from the engine and then to disassemble the turbocharger, clean inside adjustable vanes mechanism and refit all.