Fist to second shift is not in the valve body. B2 piston on the outside of the transmission. More than likely it is the bore seal, or the B2 piston is really wavy on the shaft as all the seals/o-rings around the perimeter get cooked from heat.

You will need to need to remove the flex disk from the front, and the rear mount. Possibly the exhaust out of the way to get to the B2 piston, by lowering the rear of the transmission. You can push on the B2 piston cover with your thumbs to remove the retaining ring that holds the whole thing in.

The bore seal has to get replaced, but the bore guide must be plastic(yellow looking) if you have a bore guide you must replace the metal one with a new plastic one. More than likely you B2 piston will be okay, but to wavy or broken it has to be replaced, and the B2 piston is the same on all 722.3 to 722.5 transmissions on all Mercedes vehicles.

Here is a DIY on B2 fix:

http://www.peachparts.com/shopforum/tech-help/109035-b2-piston-w124.html

How to Replace Your Oil Cooler Lines

The (infamous) B2 Piston

My opinion, you are a lucky man your transmission has made it to 230kMiles because on my S320 with a 722.5 had the same symptoms at 132kMiles(you may call it a heavy car), but I elected to rebuild it, and 80% of the clutch packs were worn-out. Now I have a R129. Same problems again(at 134kMiles). I am going to just rebuild the whole thing . You are lucky, but i would rebuild the whole thing. The B2 seal will fix your problem, but it will be a temporary fix for a while.

A whole aftermarket American Made rebuild kit with seals/paper gaskets/clutches(called a Banner kit) sells for about $180 to $190. It will have the valve body seals too. The same kit minus the clutches is a (overhaul kit) is about $90. Sold by the mail order place that starts with the word R/O/C/K if you know what I mean...

The service manual to your transmission, and all kinds of extra info in links is here if you want to rebuild the whole thing..

1996 S280 Australia transmission no reverse diagnose & rebuild. - Mercedes-Benz Forum

All the best,

Martin