Check the harmonic balancer
 

The rubber layers don't usually begin to fail until many years have passed (except on classic SAAB 900s, where they are exposed to catalytic convertor heat because of the reversed position of the motor), but occasionally a defective one shows up.

Check your serpentine belt tensioner - the pulley on it could be seizing causing the belt to run hot. If you don't have a serpentine belt - check you v belts for running hot caused by something seizing. Is the smell like burning rubber? Also check the accessories connected to the belt(s) and see of their pulleys are turning at the same speed as the belt. If something is seizing up - it could be the thumping you hear. My suggestion is to check your belt(s) for overheating damage then isolate the cause.

Need help with Diagnosis
 

My wife was driving our 98 ML320 when she hears a "thumping" noise coming from the engine. Then... the battery light starts going on and off while she's driving, the power steering starts to fail, and the engine wants to stall at a full stop.
Today...
I started the truck cold and it fired right up, and ran fine, the power steering responed well, no battery light. But alas the thumping noise was still there. As the engine rpm's increased the rate of the "thumping" increased. I looked in the engine compartment and the v-belt was fine. But I did smell a burning odor. The "thumping" sounded like it was coming from the water pump. Could that be the problem?
Anyone care to speculate? Thanks!

The front crankshaft balancer will COME apart on all the newer V-6 & V-8 engines. STOP driving until this is checked out!!! YOU can ruin the front cover & the oil pan$$$$$$$$$

Thanks!
 

You guys were on the money.
It was the Harmonic balancer, it's currently being replaced.
Thanks again for all the responses... this is my first Benz, so I'm waiting for something really costly to happen.
So far the experience has been good, it's been a reliable, fun vehicle to drive.
Lets hope it continues!
Cheers.

Was this fixed in 99? I am due for a service soon and want to catch this while its' still under warranty!!!

Modified part number on the damper is 112-035-09-00 OR 112-035-08-00. The M112 engines weren't modified until engine number 650,000.(approx)
The part number is ON the damper!