The way you describe the initial failure, my bet would be the cable. Easy way to check, remove cable from speedo so you can see the end, chock the car so it won't roll, jack up one rear tire, put trans in neutral and rotate the tire, you should see the cable move (it will turn slowly unless you're really winging the tire along by hand) if no rotation, there you go, it's either the cable or drive gear in the trans. Pull the cable from trans, look inside the socket on the trans while someone rotates the tire, if the socket turns, its the cable. When the cable is unplugged from the trans, you should be able to freely spin it with no feel of resistance, and see the other end turn. I do not know if MB uses a metal or plastic drive gear in the trans, from past experience on other brands, what I have seen is the cable goes dry and gummy, making the bouncy needle & makes it stiffer to turn which eventually causes the cable to wallow out and strip the square drive socket on the plastic trans gear.

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Chris
64 190D R.I.P.
80 240D W/617 engine -for sale
82 240D -for sale