One of your symptoms seems to be rapid flickering of the temperature gauge. On my 240D, I found that the negative battery cable was corroded. Replacing that cable has pretty much eliminated the rapid flickering. Also, on my 300D the temp sensor was leaking a tiny trace of water. This caused the temp sensor terminal to be corroded to the point where the wire broke off when I went to inspect it. Note that with the sensor circuit open, the temp gauge reads zero, so this will not cause high temperature indication, but logically it might cause flickering.
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Palangi
2004 C240 Wagon 203.261 Baby Benz
2008 ML320 CDI Highway Cruiser
2006 Toyota Prius, Saving the Planet @ 48 mpg
2000 F-150, Destroying the Planet @ 20 mpg
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