I agree with most who have noted the likelihood of severe damage should be low. I am having a hard time believing the fuel injection system is capable of passing enough gasoline into the cylinders to wash them and remove the lubricant film. At least not without having the check engine light come on, and make the engine run so poorly the car would not move.
As I recall when MB introduced the aluminum alloy block with the embedded silicon crystals, they installed a boroscope or fiberscope at every dealership and the bore conditions were visually recorded and monitored. I also believe such an examination, along with the usual compression tests and leak down tests should be performed to assess whether or not any noted visual indications of wear are more than visually apparent surface conditions. Looking at a machined surface under high magnification can be difficult to understand without some additional information. Some stuff looks really bad close up, but is actually normal.
The original idea behind the aluminum alloy MB selected was to bore the cylinders, then acid etch a very small amount of aluminum away to have the rings ride on the polished bits of silicon that were now protruding slightly. The wear characteristics of the silicon were (are) much better than those of the aluminum and intended to be superior to those of typical sleeves or sleeveless iron based castings. In your case the rings may have suffered if indeed the oil film was washed away, or I guess if the material got hot enough you might have ripped the silicon crystals out of the aluminum (which is what MB was visually inspecting the engines for in the intial introduction period). Anyway, you cannot see the rings so you really do need to have the other tests done.
I would be reluctant to give in on the wiring harness at 55,000 miles. That is barely out of the 100% warranty period, and it is a major defect in either workmanship or design, unless there is some sign of other damage, in which case you might get your insurance company to kick in for the repair (like rodent damage or road debris or something).
Good luck, Jim
1986 Euro 190E 2.3-16 (291,000 miles),
1998 E300D TurboDiesel, 231,000 miles -purchased with 45,000,
1988 300E 5-speed 252,000 miles,
1983 240D 4-speed, purchased w/136,000, now with 222,000 miles.
2009 ML320CDI Bluetec, 89,000 miles
1971 220D (250,000 miles plus, sold to father-in-law),
1975 240D (245,000 miles - died of body rot),
1991 350SD (176,560 miles, weakest Benz I have owned),
1999 C230 Sport (45,400 miles),
1982 240D (321,000 miles, put to sleep)