Well, you may need to take the issue further if the dealership refuses to cover the repair. I would be furious!
You will need to contact the Zone Service Rep, and begin making a big stink about this. If your warranty booklet indicates that the part is covered, it IS covered. Cripes. I've seen dealers trying to wiggle out of repairs that might be classified as goodwill (wiring harnesses) but not usually when something REALLY is covered. Why bother? All they have to do is make the reapir and then get the $$ from MBUSA. Simple. The dealer isn't out the money.
Sounds like your dealer is difficult to deal with.
1998 C230 "Black Betty"