Though this transmission may have internal problems (hard to say from a distance), it is an absolute requirement that you first rule out disintegrated shift linkage bushings. With complex systems (like transmissions), an assumption is usually made that the most complex part is the problem, and transmissions are frequently misdiagnosed as needing serious internal work because of this faulty heuristic.
Again, you may need internal work, but you must rule out this less-than-$5 repair first.
An easy test is to put the car in drive (on or off, doesn't matter) and "feel" the shifter play from front-to-back. Anything more than 1/8" or so is indicative of worn/failing bushings . . .
I have written up the procedure for replacing these bushings, and it is located at: http://hsb.baylor.edu/html/easley/autofaqs/bush.htm
Anyone that has a MB with more than 60K miles or 7 years old should replace these as a maintenance item. When ordering them, ask for the new linkage clips, too -- much easier to use than the old ones. We're talking $5 or so for all parts -- cheap, cheap transmission "insurance" . . .