I had have had several faults like these in 98 e-classes.
When the led in the alarm switch comes on constant, it is
a pretty good indication that the pse (pnuematic locking pump)
has an internal fault. In every case that I have worked on, it
has been water related. The PSE pump sits in a well under the
rear seat cusion right next to the battery. It is mounted in a foam
capsul that does a great job of absorbing water. On every car,
there was a leak from the sunroof tray, a doorseal, sunroof drain
tube, ect ect. the pse was usually flooded and the connectors
were full of water.
A starting point at least.