Die grinder with cut-off wheel is in your future
. Just had to do this on newly acquired 88 300TE. Have title, purchased keys (owner had lost). Didn't check the cylinder for signs of abuse first. Slot turned but beyond that cylinder didn't, nor did the key go in. The OP had been heavy handed with whatever tool he thought would work. I had to cut the arm that contains the steering lock, then cut off the cylinder and collar so that I could work the ignition. I tried to do the collar alone, but since it doesn't rotate only one cut could be made. Afterthought is that a large screwdriver with a wrench on it may be able to twist enough split the collar. All done from below, in the rain. I never, ever want to do that again. It took me over an hour to be able to move my own car. Anyone need a working lock and key set for a TE less the ignition? (its probably going to be parted once I get the seatbelts out (old ones became Mercedes dog chew toys)
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