To me, it sounds like the link between the knob and the actual lock is missing or has fallen off. This happened with my 190e once. When you use the key from the outside, does the knob move up/down or does it stay stationary? You should pull the door panel off and have a look.

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2001 Dodge Ram 2500 Cummins Turbo Diesel - 4x4, auto, 3.54 gears, long bed
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'92 300D 2.5 Turbodiesel - sold
'83 300D Turbodiesel - 4 speed manual/2.88 diff - sold
'87 300D Turbodiesel - sold
'82 300D Turbodiesel - sold