Well, I finally got the key to turn. The tumbler was only a year old and the key goes in silky smooth, so I really don't think that was the problem. The old palm sander trick on the key didn't even work, so I still think it has to be in the lock assembly. I got under the dash, and while working the key I could feel the mechanism in the lock assembly through a thin end plate on the lock assembly. (thin aluminum plate? not sure as I haven't ever pulled this part). Anyway, I tapped on that thin piece on the lock assembly with my left hand fingers while working the key with my right. And the key turned. So until I get around to fiddling with the lock assembly again the key will just stay in there to prevent it from locking again.

So at this point I think I'll grind the pin that holds the lock mechanism to the steering column per the procedure on Diesel Giant website and maybe look around for another lock mechanism. Anybody ever done that lock mod on the pin? Any leads on a good steering lock mechanism? This is for a 1984 300D. Thanks all.