I just went out and looked at the transmission stick in my 500SEL that has an 87 420 transmission. You said something about the oil being at the "top twist" on the stick. My stick doesn't have any twist in it. There is a wavy section a few inches from the bottom of the stick that keeps the stick center in the tube.
On my stick, the add mark is about 1 inch from the bottom and the full mark is about 1 1/4 in from the bottom. Could you possibly have the stick from the old 240 transmission? It doesn't sound like you have the same stick I have.

PaulM

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84 500 SEL (307,xxx miles)