My expereince with 94 E320 wagon was that the old lock worked with graphite, then finally failed totally. Would not turn with any key or force. I had to destroy and drill out..

I cut the black cover off with a die grinder and the cylinder face fell off, cracked and worn out..Then I drilled the cylinder which is soft in the key zone, mostly brass. I just ran the 1/4 drill bit through at various angles and pulled out the fragments until the keying mechanism was gone and left only the slot which could be easily turned by screwdriver. And fortunately this also disabled the steering lock and now I can drive with a screw driver and still use the central locking.

I have a new cylinder but would prefer to just go to keyless with an after-market set up.

The supposed lock removal sequence never worked for me and I tried carefully sized welding rod and compared the new cylinder to the car to be sure I was placing the pins right, I could feel them but they would never release for me.

I believe its the bottom pin releases the lock cyl and the upper one releases the black security cover.

No you dont have to pull the steering wheel and column and the steering column lock, just drill out the center until it can be turned with a screwdriver. Took me about half hour to cut off the black cover around the lock and then an hour and a half to drill out the lock. Very messy! Broke a couple bits. (Just did this a couple days ago on return from a little journey which caused the car to be sitting and apparently the mechanism just froze up! The telltale click on removing the key was gone..as if the reset spring simply died)