Bad news, good news, bad news, and great news
Bad news: no matter what I did after I took the steering wheel lock/iginition switch out, I could NOT get it to turn to position 1 to get the tumblers out. I tried EVERYTHING - it would not turn out of position '0' so I could not put it back into the car in a non-working state and I could not remove the tumblers to put into a new housing.
Good news: Brumos had the housing in stock for $166 after tax.
Bad news:The housing did not come with tumblers and spade for the key fob, so I HAVE TO get the tumblers out of the old housing
Good news: The housing is light weight cast aluminum so my handy regular hack-saw easily cut the frame around the tumblers (imagine cutting the neck off a plastic bottle). I was then able to put the tumblers into the new housing and reinstall everything.
Works like Butter now!!!
Solution - about 2 hours of real labor minus all my screwing around and $166 for an instock part at the Mercedes dealership. Do NOT let a Chrysler dealer charge you $300+ for a Mercedes part.
Moral of the story - if your key starts 'locking' and you have the jiggle the wheel or try multiple times to turn it - get started on fixing it - you don't know where it will strand you. The solution is not expensive so don't get raped by the dealerships. Do NOT let them convince you it's the tumblers. (see note below). Take your time and you'll have your baby back to new and you'll have a new respect for automotive ignition systems.
Note below: George at Brumos - you're a nice guy but you didn't have a clue what you were talking about even after I explained everything to you. The people in this forum do know what they are talking about and you shouldn't disregard their advice just because most are DIY'rs.
PM me if you have this problem and need help - I'm available 16x7 to help anyone with an Xfire or an SLK with this problem. If you're stranded, I'll do whatever I can to get you fixed asap!