The top of the shock is mounted to the body by a threaded shaft that has a thick rubber bushing between the shock and the car body underneath, and then on the inside of the trunk, another thick rubber bushing, a flat washer and either one nylock 17mm nut or two regular 17mm nuts.

It sound to me as if the rubber bushing that should be between the shock and the body got destroyed. You may have to remove the shocks (not too hard) and check to see if the bushing needs to be replaced.

Additionally, if the threads on the threaded shaft have been damanged and prevent the 17mm nut(s) from tightening properly, the shock will have to be replaced.

The "dust" you see is most likely the car body getting worn by the loose shocks and rust. Be sure to check the hole and ensure it has not become enlarged (very unusual).

It appears that somewhere in the car's life someone never tightened the top of the shocks. It is very unusual for this to happen at the factory since each critical tightener is paint-marked indicating that the part has been properly cinched. Probably a result of a repair somewhere along the car's service life.

Keep us posted,

Haasman

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'03 E320 Wagon-Sold
'95 E320 Wagon-Went to Ex
'93 190E 2.6-Wrecked
'91 300E-Went to Ex
'65 911 Coupe (#302580)