I have worked under the dash and other parts of my '95 E300 and have not seen any insulation degradation. The PO had several under-hood cables replaced. It's certainly possible for the insulation not exposed to heat to degrade over a longer period of time but I don't have a hack on the number except "apparently more than 18 years."
The big risk appears to be single wires or small groups of wires not tightly tied in a bundle and sheathed and especially such things that are flexed regularly. These wires can have their insulation crack, break, and fall off. The bare wires then short one to another or to the chassis. Wires that are tightly bundled and sheathed may have insulation cracking but the insulation cannot come off because it is surrounded by the outer black PVC tubing and has nowhere to go.
Risk spots other than the engine compartment include the electrical cable to the transmission (NSS and reverse switches) because there's heat down there too, and the door wiring because it is regularly flexed.
FYI gassers have this problem too, it's not just a diesel thing. Throttle body cables are especially susceptible.
Jeremy
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"Buster" in the '95
Our all-Diesel family
1996 E300D (W210) . .338,000 miles Wife's car
2005 E320 CDI . . 113,000 miles My car
Santa Rosa population 176,762 (2022)
Total. . . . . . . . . . . . 627,762
"Oh lord won't you buy me a Mercedes Benz."
-- Janis Joplin, October 1, 1970
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