Well, I do appreciate your reply, and your suggestions. This afternoon when I got home, I pulled out the wire diagram for the engine harness, and I started to check continuity and ohms readings from the ECU plug to the different connections to the engine (i.e., MAF, CAM, etc), and to my surprise I found that the coaxial cable going to the crank positioning sensor had a short at several locations. Once I started wiggling the coax the car started perfectly, and while the vehicle was running I twisted the coax and the car shut off. The other 2 coaxial cables inside this wire harness, are for the Knock sensors and they are also defective.

I guess tomorrow I will order a new engine wire harness. I hope that this thread will help someone with a 1996 E320 starting issues. I will be taking pictures and posting the DIY for others to use.

Oh by the way the vehicle has 70,000 miles.

Thanks