Got the new key from the dealer today...... and........ its works great!! that was for sure the problem, and after comparing the old an new key, its quite obvious so disaster averted!! after looking at my other 1977 240D key, i'm gonna go order one for him too, seems like $30 well spent!
take a look at the old and new, at first glance it looks like a totally different key !

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1981 240D ... 265k
1977 240D ... 265k
1977 240D ... 250k

I am surprised that the old key actually WORK?

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Not MBZ nor A/C trained professional but a die-hard DIY and green engineer. Use the info at your own peril. Picked up 2 Infractions because of disagreements. NOW reversed.

W124 Keyless remote, PM for details. http://www.peachparts.com/shopforum/mercedes-used-parts-sale-wanted/334620-fs-w124-chasis-keyless-remote-%2450-shipped.html

1 X 2006 CDI
1 x 87 300SDL
1 x 87 300D
1 x 87 300TDT wagon
1 x 83 300D
1 x 84 190D ( 5 sp ) - All R134 converted + keyless entry.