50 PPM is an awfully tight limit for ASM 2525. What has this limit been in the past?
I have recent California ASM results for a buddy's '87 560 SEL and it scored 42/74 on the 2525 test. In CA the 2525 test is preceeded by the 1550 test, which is the tough one. Dave's 560 was 70/100 and the best mine has been in recent tests is 73/116 on the 1550 and 47/91 on 2525. The 2525 is usually not a problem because the catalyst heats up during the 1550 test, which is the acid test if the catalyst isn't hot enough. There is no idle test in CA, but a move is on to add it.
Your limit would probably fail most KE-equipped Mercs in California as few can score much under 50.
I assume your test is only 2525 and idle? You didn't report the O2 level. Is it listed on your test report?
There's appears to be a move to tightening limits in many jurisdictions to the point where more and more cars fail.
Suggest you look at this thread and the others it links to:
http://www.peachparts.com/shopforum/showthread.php?p=833484#post833484
I don't think there's really anything wrong with your car. If the O2 is zero, the HC can't get much lower. Relatively high HC is the nature of the KE-beast, which is why "conditioning" is so important. Old cats need to be REAL HOT!
You may want to take the limit issue up with your emission test authorities.
Duke