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Question:

if you had found three metal bars all painted in white. one bar is a magnet, one is made of copper and one is?

(continue for the above) a piece of iron. using nothing else how can you find out which is which ???

Answer:

Replace the pan gasket at minimum, and definitely use the lucas transmission stop leak, it won't stop big leaks abut it will help with the little ones.
I doubt that the torque converter leaks. It's more likely the transmission front seal. They probably want to fix that AND sell you a new torque converter, besides replacing the pan gasket. I doubt sealing additives will seal that serious a leak. Replace the pan gasket and try the sealer additive and see if it works. That is a temporary fix and if some Mercedes collector wants to buy your car they won't care that much about having to work on it later- as long as you let them know of the problem you had.
The moving loop would have current in it about magnet.
Find the 2 bars that attract each other. Call them A and B. One is the magnet one is the iron, but you don't yet know which way around they are. The other (C) must be copper as copper is nonmagnetic. The strongest parts of a bar magnet are the poles (near the ends); magnets are weakest in the middle. Make a 'T' shape with A the top and B the vertical. If the attraction is weak, A is the magnet and B is the iron. If the attraction is strong B is the magnet and A is the iron. You can reverse A and B to check.

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