Its a different model, mine is a 1997 E320 Elegance.
When the Mercedes Benz Security System went wrong recently the normal reset scheme described in the handbook failed to do the job. The system has green and red indicator lights that show the condition of both the central locking and the immobiliser. These were completely out of sync with both red and green flashing rapidly at the same time. A specialist breakdown repairer tried to effect a forced reset by disconnecting a battery terminal, this did not work either and was advised that it would probably require a replacement MBSS module ($????). When I was left with the vehicle still dead as a Dodo I got to thinking about how much pure electronics there was in total and how much residual current could be held in all those circuits. What I did was disconnect the battery live terminal, turn the ignition key to the on position and the lights on for 10 seconds to dissipate any residual current, reconnected the battery and recieved a single chirp from the alarm sounder. I straight away made sure all doors boot lid and engine compartment was fully closed, then used the key remote to lock, wait 5 seconds, then unlock the car and everything was working OK, no further problems. It may not be the same for your model, but if it sounds familiar why not give it a try.
(p.s. dont forget you'll need your radio code to reset it when you have done this)
(p.p.s. I have thought long and hard about what might have set this off and have decided it may have been the result of reduced battery voltage caused by lack of use during a prolonged cold spell)
Roy Ibbotson - rbirdroom@aol.com, December 2007