Cars with low mileage/age ratios will have WAY more exhaust problems than cars that are driven regularly and for decent distances. You need to make sure the exhaust system is completely hot and dry before stopping the car.
Also, 400E/E420 cars driven primarily in city traffic will use front pads at an alarming rate. That said, using a set from 25K to 38K is pretty shocking. Did they check both sides? Does the car brake normally? You should get a second opinion for sure. I took my car to one dealer, and they started going on about all four rotors and pad sets being shot. I took my car home and had a look. Well, the fronts were down, and the light would be on soon, and the rotors were at spec, so should have been replaced. The rear pads were good, and there was TONS left on the rotors. I took it to another dealer (didn't tell them I have a micrometer) and had them check them. Confirmed my findings. Now, I don't know if was dishonesty or a simple error, but I haven't had too much trust for the first dealer...
The M119 V-8's use up caps and rotors more than some other MB designs, but I'm surprised at the low mileage repair for that item.
You're not going to get very far talking about the age/mileage of your car at the dealership. Talk to the sales dept about trading it in. They'll cry about it being practically prehistoric, and offer you next to nothing unless you're trading on something significant. Back in the early 1980's when I visited MB dealerships, they talked about "20 years" and "high mileage." Today, anything older than a short term lease-return is old and not "fashionable."
1998 C230 "Black Betty"