I'm not sure, but I was under the impression that this problem is usually related to troubles in the 'Ignition Lock Cylinder'. The 'ignition switch' is just the electrical bit on the back.
I believe you can remove the ignition switch by removing 3 screws at the back of the whole mechanism, then try to turn the key. That would rule out the switch itself.
Best of luck.
1986 300E 5-Speed 240k mi.