Had a similar problem (misaligned headlights) when I bought my E320 back in '05. Turned out the problem was the previous owner had not installed the LOW BEAM headlight bulb properly (it was kinda cockeyed in the housing's socket - not seated properly). When I leveled the low beams, the high beam on the "bad" side was looking at the International Space Station. I suffered with it for a while until the misaligned headlight burned out and discovered the problem when I replaced the bulb myself.

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1998 E320 4-Matic Wagon