Targa,

In my opinion it is where it is exposed to the elements-Heat and light...

My 1996 S320 does not have the problem in the engine compartment, but sure has it in the mirrors. The test is :

Fold the mirrors from the button near the shifter if they stop half way. It is because the wiring is shorting together, and the fuse has just popped! Look at the folded mirrors for exposed wiring. If the mirrors fold and come back, I would not worry about in the mirrors.