Seeing that it’s a fun car you won’t have to rely on, go for broke. If you have $10k to spend, you can get a fine example of almost anything except maybe a 911 or E30 M3. In many cases though, rust is a problem. Up here in NY it’s a case of fly away from the salt belt to pay a little extra for no rust and drive it back versus buy local and have to invest in some level of body restoration. Being that you’re in Alabama, it’s a better situation as far as that goes.
Some exceptional cars I’ve driven over the years and would recommend for your needs are the 83 320i coupe, 89 325i coupe, 93 325i coupe, 99 540i 6 speed (the most expensive of all these to work on), 87 Jetta GLI 16v, 92 GTI 16v, 92 Corrado VR6, 96 GTI VR6, 1990 Mercedes 190E and pretty much any 85-92 Golf or Jetta with a VR6 swap or TDI swap. If you are a car modifier and willing to go out of your way a little, a good VR6 swap car can be found for sale any day of the week.
Being that you are leaning towards a Benz, possibly diesel, I have a feeling you’re not trying to drive fast for thrills. My recommendations are biased towards cars that are rewarding to drive aggressively and feel comfortable at 100mph, which is pretty much what every German car excels at. If you’re mostly after the comfort, refinement, and feeling of driving a car honed from the finest slabs of granite, you should avoid VW. I’m biased towards VW but reality is reality, they’re ideal if you want a light car and the performance qualities inherent to that. They make for the most forgiving winter car because of the lightweight/front wheel drive combo, but luckily you don’t need to worry about that.
A final thought at the moment: You should be prepared to work on this car yourself for the most part, and a Benz will require the most specialized knowledge and service of all the Germans. If you don’t work on the car, much of the joy of driving an old German car will not be fully realized.