I'm curious as to what type of alternator was put into your car. Was it a MB rebuilt? $400 sounds a bit high.
Also, for those who read this thread in the future, check the regulator brushes first. Many times, this problem is the fault of worn brushes and, at least on a 300E, it's about a $25 part. Check out Fastlane.
joel, it may well be that your alternator was fried and needed replacing. However, in the future, replace the brushes first. I had my alternator replaced last year but suspect that brushes would have worked.
Anyway, glad your wife is back on the road.