Sanding the wires won't damage anything. There's virtually no current being carried, so the risks of sanding are nil. The wires and contacts build a varnish layer over time that makes an insulating layer. You have to remove that and the safest way is mechanically (meaning sanding). Be gentle and you can easily and safely restore good connection.

If any varnish is left, or if the contacts (meaning the slides on the float too) are tarnished, you'll have high resistance and the level reported can be off.

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Current stable:
1995 E320 157K (Nancy)
1983 500SL 125K (SLoL)

Gone but not forgotten:
1986 300SDL (RIP)
1991 350SD
1991 560SEL
1990 560SEL
1986 500SEL Euro (Rusted to nothing at 47K!)

Gone and wanting to forget:
1985 524TD 167K (TotalDumpster™) [Definitely NOT a Benz]