The saga continues but there may be a happy ending...
On the way to my dad's shop yesterday I hit a big bump doing about 45 mph and once again our ML popped out of gear. I figured that's three times in three weeks, I better start forking over the $$. Well I made it to my Dad's and loaded the car on his rack. As planned, I checked the transfer case wiring first. Everything looked good: there was no mud, no dirty connectors... nothing. It all looked great.

Next I drained the transmission and torque converter and proceeded to remove the transmission pan. When I checked the bottom of the pan I saw a light coating of material which is what I expected/hoped to see from a transmission that has not had its fluid changed in 115k miles -- I didn't see any metal shavings and fluid smelled okay although is was a little brownish. I also check the tranny level before I drained everything an it was correct. Heck I was a mechanic for three years back in my college days so, I've seen some pretty bad transmissions and this one didn't look bad!

Next I removed the shield that covers the wiring connector that inserts into the front right of the transmission and then removed the connector. I found the outside of the connector -- the part external to the o-ring -- packed with dirt which was no doubt due to my little off road adventure described above.

I don't think the dirt was my problem but it did lead me very quickly to what I think was the problem. The twelve or so wires in the transmission wiring harness that run down to the connector are wrapped in a heat resistant cloth. When I examined this covering I noticed that that the transmission wiring harness was resting against a heat shield that protects the car from the catalytic converter about 9 inches from the connector. When I examined it more closely I found that the heat shield edge had cut through the wiring harness heat resistant cloth and had warn away the insulation on one of the wires in the bundle, the black one. I repaired the wire with some insulating tape and used a zip tie to connect it to the fill tube thus ensuring that the wiring harness no longer makes contact with the heat shield. Once that was done, I changed the filter and gasket, installed the "new" magnet and vowed to change the fluid every 30k miles. The car has been running great.
So, here's my concern/gripe.. how may other ML users have wiring harnesses that are being damaged due to the poor wire route? I've got to believe that just about everyone's ML has this problem, as chassis wind will definitely push the wiring harness into the heat shield and over time it will wear. I fixed this problem with a 25 cent zip tie but, I wonder how many other ML owners have had their transmissions rebuilt unnecessarily...
Anyway, for all you ML owners out there you may want to check to see if you have this potential issue.