I don't know about your instrument light problem, but your fuel gauge problem is a bad fuel sending unit. This failure is very common, and the gauge bounces just as you described, especially when you are at a half tank of gas.
Also, please refrain from typing in all caps. In internet etiquette, it is the same as yelling.
2001 E430, Bourdeaux Red, Oyster interior.
1973 280SE 4.5, 170,000 miles. 568 Signal Red, Black MB Tex. "The Red Baron".