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Old 07-07-2008, 03:58 PM
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Join Date: May 2007
Location: Richmond, VA
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I'll let someone with a lot more experience than me verify the diagnosis. I'm still a bit of a Benz neophyte, so my advice is worth everything you paid for it.

The differential has two rubber bushings that secure it to the rear sub-frame. These will wear out after time and allow the differential case to rotate slightly when torque is applied or removed. Obviously, it can only go so far and the clunk your here is the metal parts smacking together. If that is indeed the case you should also be able to hear the clunk when you go on/off the gas.

Replacing them is a fairly involved job that requires some special tools, but totally out of the realm of the dedicated DIY mechanic. Search around this site a bit and you should find several articles on the subject.
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'97 S320 (LWB), Ruby Red Metallic, 73k miles
'97 S420V, Smoke Silver Metallic, 155k miles
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