The warning light should be for low oil level, which has nothing to do with pressure.

You need to hook up a manual guage to confirm what the electronic one is reading. For my turbo charged engine MB wants .3 at idle and the full 3 bar by 3k rpm's. I imagin the M104 can't be all that different. Most seem to idle somewhere between 1-2 at hot idle. It should of course peg as soon as you bring the RPM's up.

I'm not very familer with the M104 and you may not even know what to look or listen for. But if it really has no oil pressure I would think the lifters would protest, you should hear a pretty good racket when you lose pressure. If you are unfamiler with what to look for I would have the car flat bedded to a good shop and let them hook up a mechanical guage to see what it really has. Driving it with no oil pressure will ruin the motor, and I bet a rebuild is $8k.

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1969 280SE
2027 Ram 1500
2026 Genesis GV70
2007 Tiara 3200
1988 Egg Harbor 37
1981 Boston Whaler 17