'97 E420 Transmission is giving me error code p0730, which indicates "gear ratio problem" .
There are several possible causes for this , some of them related to the transmission actually not shifting into the desired gear thus not attaining the proper gear ratio, but in my case, appropriate gear is reached.
The transmission controle unit derives the gear ratio by comparing input from RPM sensors N2 and N3.
These are hall effect sensors that are part of the electrical conductor plate which is mounted on top of the valve body.
During test drive with scanner connected, N3 sensor is sometimes reading 0 rather than a "normal" value. Incidentally, I only observed the bad reading from N3 when transmission was in 5th gear.
I measured the sensors electrically (resistance) and N2 and N3 behave similar. I realize that they are hall effects and that just measuring their resistance may not be telling all.
So, to rule out the sensors, I bought the new electrical conductor plate from MB, which cost only $150 so not too wildly expensive. It comes with the 2 new RPM sensors.
With the oilpan and valve body removed, when I look up from the bottom of the transmission, I see the two holes through which the RPM sensors stick into the main transmission housing. I can see the two encoder wheels from which the RPM sensors pick up their respective signals.
Now here comes my question:
The front encoder wheel ( the one closest to the engine) is solidly mounted on its shaft. The rear one, which seems to be part of clutchpack K1, has about 1/8 inch axial movement.
Is this excessive and could it be that N3 is losing it's signal because the encoder wheel is not lining up properly with the sensorhead?
Or, is the axial play a logical result of the fact that there is no oil pressure in the system when I am inspecting it this way ?
I have attached a picture to illustrate what I am talking about.
I would appreciate your opinions.

Attached Thumbnails