W140 Brake Squeel Bad Pad?
 

I have a 1997 S320 and i've been struggling with brake squeel.

I bought OEM pads and it still squeels regularly at low speeds sometimes extremely loud.

Today i took the caliper off to investigate and i see a cut in the outside pad going about 3/4 of the way up and down it. This isn't stock is it? Would this cause a squeel? What caused the pad to get a groove in it? I dont want to pay for OEM again, what should i buy? Will thin rotors cause a squeel or break pad problems?

Having trouble picturing this "cut" you refer to. Can you post a picture? As far as the squealing is concerned, you should use anti-squeal paste. The MB manuals do not say to use it, but if you don't, the brakes will squeal intermittantly.

http://v12uberalles.com/Front_Brakes.htm

That groove is part of the pad, and not a result of wear or damage. It is meant to help cool the pad and rotor, as well as provide a small path for accumulated brake dust to escape. Squealing brakes are usually caused by two things.
1) Seriously worn out pads, where the metal backing plate is contacting the rotor, or
2) The pads are vibrating inside the caliper during driving.
Since your pads look like they're in very good condition, I would say that you're suffering from the vibration issue. Buy some anti-squeal paste, and apply it between the backs of the pads and the caliper pistons. If you have the steel plate between the pad and pistons, put the paste on both sides of the steel plate. This should eliminate the squealing.

Use the brand Textar for brake pads. They are OEM and I have had the best luck with them. And you need to buy new rotors to get rid on the noise. This rotors dont take the heat, heat is one of the causes of noise. It is basically the same material rubbing against itself, thats the noise. Brake dust in the rotor.