On my e320 wagon the dash harness was damaged all the way from the fuse box to the ground wires you're talking about.

There was a recall on these cars to correct a problem with wires shorting out down in the passenger footwell. Some additional padding was placed around the points that were causing the problem. I'm not sure how you would check to see if this was done. Possibly a local dealer could assist by running your vin #.

Hopefully you've caught the problem early enough that it won't be a big problem to repair.