I think Mike's on a good track. Had the same problem with our '89 560 and it is the ignition switch. Here's a good test, warm up the engine then turn it off. Set the cabin temp to full or close to it, blower switch to HIGH. Turn the key to the "ON" position without starting engine, if you get blower, it's likely the ignition switch, odd as it may seem. I have a new one in the garage, but my wife and I have both developed good "key wiggle" skill.

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Earl McLain
'02 C230 Kompressor
'89 560 SEL "Frau BlueCar" (retired April 2004)