1997 E320 comes up on the display with the message "DISPLAY DEFECTIVE" and has a picture of what looks like the coolant tank symbol. Is this a sign of a faulty sensor in the coolant reservior or something else?

When that message comes on, it usually means the coolant level sensor and washer fluid level sensor circuit is open. The two sensors are in series connection. The washer fluid level sensor should measure 170 ohms (when fully immersed) and the coolant level sensor 110 ohms.