I had the weird gauge problems on my 85 300D - i don't know if they're the same on the W124s but I just took the gauge cluster out, took it apart, cleaned everything carefully with alcohol and made sure all the little tabs were making good contact (there was one big one I bent a little to make sure it was in good contact), and that fixed it perfectly. No more smacking or pushing in certain spots to get accurate readings. It took about 20 minutes and was very rewarding.

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kalpol
79 280SE
82 Fiat Spider 2000
81 Fiat Brava
04 BMW R1150RT
96 Jeep Grand Cherokee