over in DD, we have LOTS of threads about pulling the tank sender, and cleaning the wires in the tube. you could have rust or other gunk stalling the light. the diesel uses the same sender as the gassers, so following our DIY threads should get your light working!
http://www.peachparts.com/Wikka/W124FuelSender

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John HAUL AWAY, OR CRUSHED CARS!!! HELP ME keep the cars out of the crusher! A/C Thread
"as I ride with my a/c on... I have fond memories of sweaty oily saturdays and spewing R12 into the air. THANKS for all you do!

My drivers:
1987 190D 2.5Turbo
1987 560SL convertible
1987 190D 2.5-5SPEED!!!

1987 300TD
2005 Dodge Sprinter 2500 158"WB
1994GMC 2500 6.5Turbo truck... I had to put the ladder somewhere!