The oil level light on the M103 in my 4matic will only light after the engine has warmed up. I think it's a conductivity measuring device and it's probably cal'ed for hot oil. It's supposed to come on when fluid is at the bottom of the dipstick, but I've heard of complaints both high and low.
As far as mixing oils, SAE designations require "miscibility" among all other approved oils in order to get SAE approval. Don't worry about oil and vinegar scenarios in your engine.