Bought another 95 E320 last week. Station wagon. Now have wagon and sedan.
Anyway, headrests on wagon wouldn't go up or down. Following directions on this link http://interior.mbzarticles.org/pwrhdrests/
I got the seatbacks off (took a while before getting up enough nerve to pull sufficiently hard to get the cover out of the channel) and found something that I haven't seen posted before, so...
The mechanism that connects to the flex cable from the motor has a gear inside that rides in the toothed channel of the black plastic post which attaches to the head rest post. As the gear turns it moves the headrest up and down.
The toothed channel is about 4 inches long so that is the extent of headrest travel.
Unlike my sedan, the headrests on the wagon don't seat completely down on the seatback at the lowest position. Rather they sit about 1" from the seatback.
Apparently someone had physically forced them down on the seatback which pushed the geared mechanism down past the end of the toothed channel. So, no movement of the headrest.
By holding the geared mechanism against the toothed channel and using a pair of channel locks on the knob where the flex cable connects I was able to force it back into the toothed channel. (forgot to say I disconnected the headrest post and took it to my workbench).
Now both headrests work.
So, if anybody has the same symptoms, maybe this will help.