Key was cut at a locksmith with a machine that the locksmith said read the original MB parameters from the key. Machine was computerized and 'read' the key before cutting the new one.
Maybe there's still dirt in there. The grinding doesn't sound like dirt, it sounds as if the wafers/pin are not in the right place.

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1977 300d 70k--sold 08
1985 300TD 185k+
1984 307d 126k--sold 8/03
1985 409d 65k--sold 06
1984 300SD 315k--daughter's car
1979 300SD 122k--sold 2/11
1999 Fuso FG Expedition Camper
1993 GMC Sierra 6.5 TD 4x4
1982 Bluebird Wanderlodge CAT 3208--Sold 2/13