100K mile 5 year warranty is good but any 100K mile warranty should be 7 years or more. Is the warranty five years from the second owners purchase date or five years from the original ( remaining from original... ) purchase date? What is more likely 100K miles in five years or seven years with under 100k miles?

This is an interesting dilemma, but if it were me, I'd return the car.
Also verify this dealer is the dealer that Mercedes sent the car to, as opposed to a dealer exchange.

I think the CLS is a most beautiful car, my dream car. But I would appreciate my good luck that a major issue occured while within the seven day return and take it as a warning that in the future it is likely to need warranty work.

I believe most any 2007 Mercedes you purchase now will be of very high quality. The new 2007 E-class has 2000 new or redesigned parts, the 2006-7 C-class is very nice and well made after being in production for over six model years.