92 300ce m104 sensor on right side of air filter box???

[mercmike32]

I have a 1992 300ce with the m104 dohc. It has the ram air into that start off at next to the aux fans and leads to a box over the throttle body. My question is what is that sensor on the right side of the box. Mine looks REALLY old and useless. Its dried up, discolored and falls out a lot. So most of the time its not even in while I am driving. Is that bad. Beacuse I do get pretty bad gas milage, I get about 12 mpg.

Every time I start my car I kinda chock over the fumes from the gas in the exhaust.

Thanks in advance.