Michael thank you for the input,
I agree with everything you stated and wanted to make a few more coments. The reason for the tranny rebuild was due to a leak at the seals, the owner decided to rebuild since it was already apart. As far as the differential, the reasoning from the dealer was that their is a sensor inside which was faulty and Mercedes warrantied the differential. Let me know if you think these sound like valid answers.
I have had a chance to test drive a 500E and have an idea what to expect but if anyone out there lives on the west coast and would be willing to test drive the car I would love to hear from them.