I just had the same problem, I tried a locksmith first, but he was unable to extract the key.... Next I tried to remove the lock shield with no success.. I suspect, because I was unable to turn the key to position one fully.... I ended up having to cut the lock shield off with a dremell tool. Its a pain in the butt man.. Good luck... but as they stated before, take your time do not force it. That will only make things worse. My new tumbler and ignition lock shield should be delivered today. Currently I am driving around with a disassembled dash and using a screw driver to start the car!

Your options:

1. Locksmith
2. Fabricate tool to remove ignition lock shield Link -> http://w124-zone.com/downloads/MB%20...is/46-8110.pdf

3. Pay to have the repairs done
4. Do it your self.

I have a 1991 300CE not sure how similar it is your model but it should be really closes to the same design.. Here is a link to a how to -> http://www.peachparts.com/Wikka/W201IgnitionSwitch

http://www.youtube.com/watch?v=H2kAIA2-sZ8&feature=player_embedded


Good luck bro