Thank you Larry and Steve for your posts. I guess after I calmed down and spent a little time under my car, I pieced together what happened.
My hunch was it was the dealer's mechanic that is at fault, but perhaps not for not snugging up the bolt.
As I mentioned, the dealer replaced my right upper control arm. I specifically told them to replace any rubber that needed replacing because I hadn't been able to align the car after two previous shops.
8,000 miles after I the dealer, I still saw uneven wear on my front tires so I was thinking of trying to sell her. Low an behold, I started a new job near Akron and a great local shop was recommended by a friend. They only work on German autos, it is 4th generation shop, and their place is spotless. After finding this shop, I decided to have my car aligned once again with all necessary parts. The new shop did lower control arm bushings, strut rod mounts, and strut rods, right rear half shaft (fuel tank leaked on rubber and cracked boot) and motor mounts. It ran like new after I left the shop and I felt satisfied.
Oh yes, my point: I lost the bolt out of the sway bar and the washer combination while I was driving, but I still had the aft bushing in place and it was worn down to the nub. I can only assume the forward bushing was the same way. I am theorizing that due to normal wear and tear, there was not enough force on the bolt and rattled its way out or the previous MB Tech did not use Loctite. I noticed the new bolt came with a locking compound pre-applied to the threads.
I am a little miffed that while MB dealer did their $1100 alignment and removed the sway bar to install a new upper control arm, they didn't replace (2) $4 bushings and a $3 bolt or they reused a blot. My service CD-ROM must be riddled 10,000 times with that little note not to reuse bolts on principal! I know for sure the bushings weren't replaced and feel fairly confident that the bolt was reused. (Lord knows I would have been billed for them)
The good news was that for $11 and a little of my time, I got the sway bar hooked back up tonight and tightened the bolt with my torque wrench. I checked the drivers side bolts and everything was tight. I'll probably due the same job on the driver side in a couple of weeks. I'm sure glad that the Akron MB Dealership had the parts in stock. Hip Hip Hooray! .... and thank you for the advice.
P.S. Larry, I'll drop you a line if I ever decide to lay my 5spd to rest. I know the clutch is the same in the 240D and my 300D I just admire its simplicity and the fact that a intermediate DIY'er like me can troubleshoot her. I think I am also attached because my father purchased her almost new in Germany in 1985 (to avoid paying German sales tax) and had her Americanized in PA. It was his daily driver for years and I remember taking the car to my high school prom. I lost my father to pancreatic cancer three years ago and I like to run it as tribute...not to mentioned the ride in a Benz (my other vehicle is a Jeep Wrangler -absolute torture on the highway). I don't know of another brand of car that would be in such good shape at 271k.
Just one last thing.... the tech who worked on my car said I had the "dream" 300D. Here's why according to him:
1) It doesn't have climate control - just heater knobs (A/C was retrofitted by MB dealership in Germany before transport - don't recommend it - never worked right, never will)
2) It has manual windows
3) I don't have cruise control
4) It doesn't have a turbo charger
5) It has cloth seats
6) It has a manual transmission.
I guess I am lucky to not have to troubleshoot some of the more problematic accessories.
'06 E320 CDI 51K miles
'02 VW Jetta GLS TDi 120k miles
'99 Ford E350 7.3L Powerstroke 200k miles -sold
'84 Euro 300D 5 spd manual 317k miles - sold