The car is fixed!

It was the Transmission Control Plate that receives the data from the other systems - the transmission control module is plugged into this board. So what happens is this board gets damaged or confused and shorts out the TCM. The board is not too expensive ($250 or so) but it is buried in the transmission - seems like a design flaw to have electronic componenets immersed in Transmission fluid......either way, that was the problem and I am glad it is fixed.

BTW, mechanic did mention this is a HUGE problem on the W210s. What happens is the seals go and the plug actually wicks transmission fluid into the housing and shorts things out.