I seem to have the same problem with my 300SEL. With a full tank, needle is fine. At about 1/2 tank, the needle intermittently drops to empty, sits there for a while and jumps up to the correct reading momentarily, then drops down again. Reserve light functions normally.
1988 560SL Black/Palomino
1988 300SEL Black Pearl/Burgandy
1984 500SEC Anthracite Grey/Palomino