I have a similar problem. My mechanic has checked out the front and back ends and says the shocks are looking worn (leaks, etc). I recently replaced the steering damper and that made a big improvement in the steering. This looks like a shock absorber mounted cross wise almost between the tie rods. You can't miss it if you look under the car, and it makes a big difference if you replace it. They only cost about $50 and are easy to replace. I am having all my shocks replaced this Thursday. I will let you know if it has a positive effect on overall steering. I have heard others say that shocks made a difference.

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Jason Priest
1999 E430
1995 E420 - retired
1986 420SEL - retired