the problem could be the "Not in park safety bypass" as mercedes calls in instead of neutral safety switch on the transmission. Id check that too.

When you moved the engine into the 240, did it come with the transmission and did you wire this switch in or bypass it? Otherwise it won't do anything, will totally prevent a crank. Im pretty sure its a solid purple and purple and white wire going to the tranny that you can wire together or jump to bypass it for testing

I hate that little plastic boss on the back of the old ignition switches, id deep six that if I were you. My ignition jammed, and that plastic boss made removing that plug next to impossible.

A new electrical ignition switch for 30-40 bucks will probably not have that boss, and ensure the switch is good. Worth it in my opinion to remove that feature if you ever have an ignition problem where the key won't turn

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