P1223 doesn't sound familiar to me, are you using a Mercedes specific diagnostic tool?
If so and it really is the injector "needle lift sensor", the only cure is a new injector, make sure you are sitting down when you get a quote!
I have a bit of a problem with the description "injector solenoid position sensor" though, that sounds like a code for a CDI injector which yours aren't (not opened by solenoids). The same code may well be used for the needle lift sensor in our injectors as for the solenoid position sensor in a CDI injector, but I would try to get a confirmation of the meaning in relation to your van before doing anything drastic.
As a further check, find the cable that runs to the injector with the sensor (it is one of the 2 mounted on the intake manifold), unplug it and measure the resistance accross the pins on the injector side of the connector. The resistance should be 103 ohms, if it isn't very close (maybe +/- 5) your sensor is dead. The sensor injector can't be repaired - not even with a new nozzle, apparently it never works afterwards so it always has to be replaced.
For my 1996 the injector part number is different to yours and probably getting rarer, I had to buy the sensor injector earlier in the year and it was the best part of £500 - from a diesel specialist, not a Merc dealer. One of the later part numbers, possibly the one for a 1998, does come up new on ebay occasionally - they tweaked the opening pressures slightly and changed the leak off fittings so I couldn't just get one of those instead. Good luck, I hope the code turns out to be misinterpreted!
Thinking about this some more before hit reply......
My van started OK when the sensor was down, it just ran badly.
The only times my van wouldn't start at all, but with diesel getting to the injectors were:
a) when the cylinder head cracked - wouldn't start hot, bit after cooling down for an hour it would start again. Obviously as soon as I worked out it was the head I stopped trying to start it.
b) after I changed the head the van died on me on the way to my brothers wedding. It was delivering fuel to the injectors but not at high enough pressure to open them (like I say no solenoid, just two stage spring loaded injectors on these). Turned out to be the fuel temperature sensor in the fuel pump itself - fortunately the garage I ended up at was able to change that sensor relatively easily and I was back on the road by lunchtime, just a shame I got to them as they closed on the Saturday so it was the Monday lunchtime....
In case B it fired on ether but would only run for a few seconds because the injector nozzles weren't opening. The ECM obviously can't stop the mechanical part of the pump from pumping, but it can stop it pumping enough to make the nozzles open.
Jim