That cyl is a little low, but not enough to cause starting problems or failure to go into closed loop mode. I've seen 300Es with NO compression on one cyl and they start and run. I would think something else is causing a starting problem and closed loop problem.
Could you give some more info on what is happening when you try to start it? Does it take a long time to start? Does it start but run very rough? After it starts, does it run fairly smooth? If warm, will it restart easier than when cold?

Paul

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84 500 SEL (307,xxx miles)