Ok, this turned out to be a very simple fix.
This is for Gen I W126 cars.

Turn the key counter clockwise until it is horizontal.
Then with a flat head screwdriver force the latch toward the rear of the car.
It will then catch and you are done and back to normal operation.

I still don't know how the latch got in the locked position with the trunk lid open.

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1984 300SD 300,000 miles--two tank WVO setup
2.88 diff & 500SEL anti-squat rear end