The idle surge problem with my C280 was caused by the purge valve/regeneration valve. Every time the code was tripped for it, I would clean it out with some WD40, as per Arthur's method. I finally got tired of doing that all the time and I just bought a new valve Instant cure. Your E320 has the same M104 engine so it might be worth looking at. To test the purge valve just hold it in your hand while the car is running. You should feel it pulsing, like a heartbeat. If it isn't pulsing, it ain't working. It takes all of 3 minutes to replace, no tools required.

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Jonathan

2011 Mazda2
2000 E320 4Matic Wagon
1994 C280 (retired)