What about West Germany - in the early 1950's were any K-98s or Lugers used by the army or border guards?
The Bundesgrenzschutz had about 10,000 K98k bought from France; heavy support weapon for the squads was the MG42, lighter weapons were old stuff of US manufacture (M1D DMRs, M1 Carbines, Thompson SMGs).
The Kar98k in the BGS were replaced around 1960/61 when the Bundeswehr got rid of the initial buys of FN FAL which were subsequently handed down to the BGS and state police forces (and with state police occasionally still sit in the armouries as the heavy weapons outfit for local precincts). The Guard Battalion of the Bundeswehr still uses the K98k for ceremonial purposes.
The Luger P08 wasn't used postwar. Standard sidearms were the Walther P38 (P1, in the Bundeswehr till we gave them to the Afghans a couple years ago) and the SiG P210-4 (P2, about 5000 bought for the BGS).
Any idea if Belgium was indeed the capital for black market arms dealers during the 1960's or was it just a myth created by fiction writers?
That mostly stems from legislation - Belgium used to have a very lax weapons law that facilitated buying up weapon parts there and smuggling them into other countries.
For example, there was the situation that in Belgium you could buy any firearm part except for the grip (because the grip legally made it a weapon). In Germany you could buy the grip legally without any permit up till 1980, but not any sears etc - the law was changed specifically due to that situation.
As a result of this up till 1980 there were literally hundreds of thousands of weapons bought incomplete in Belgium and turned into illegal weapons in Germany; similarly, there was smuggling of German grips into Belgium to create illegal weapons there. There were a couple sting operations in the 70s and 80s in that regard in which thousands of people were arrested and charged.
Not sure about the legality of stuff like auto sears in Belgium at the time, but that's minor parts after all that you can source otherwise.
Something else I'm curious about - the practice of balancing an MG on your No.2s shoulder for firing. Is it just a German practice or is it done by others?
No idea. Seen it done with M60s before (resting the folded-back bipod on the shoulder), but i doubt anyone's teaching that as a valid combat stance in training.