So you are saying the physical shifter knob (leather handle) is loose? Like you can turn it left and right a little bit?
If so, I had the same problem. Fortunately, the shifter on the S420 was the EXACT same. I switched them the day before we turned the S420 in for the CLK.
Though I did attempt to fix mine. Once I removed it, I pulled the plastic part on the inside of the shifter out and could tell where it was broken. I tried to correct the problem with some glue, but it just wasn't working properly. You might want to try and fix it... ?
Otherwise, you'll just need to get a new one... And you can replace it yourself, it's not *too* difficult.

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2006 E350 w/ 155k miles (Daily Driver)

Previous:
1993 300E 3.2L Sedan w/ close to about 300k miles
2003 E500 Brilliant Silver (Had 217k miles when totalled!)
1989 300E with 289,000 miles (had for <1 yr while in HI)
03 CLK 500 cabrio (Mom's)
2006 C230k (Dad's)
1999 S420 (Mom's/Dad's)
2000 C230k Sport sedans
2001 CLK320 Cabrio (Mom's)
1995 C280 My First Mercedes-Benz... (155k miles. EXCEPTIONAL AUTOMOBILE. Was Very hard to let go of!)