Are you holding the kickdown button? If so, you have to let off of it to shift up. Check your bowden cable, if too tight your shifts will be late and at too high of RPM. This car should NEVER shift ANY gear higher than 4100 RPM.

Additionally, unless you're doing less than 55mph, you should not be forcing a downshift for passing. It sounds counterintuitive, but all of this engine's torque is at low RPM. You'll actually accelerate and pass FASTER by staying in 4th. Seriously, time it, 55-70mph is nearly 3 seconds faster by staying in 4th gear than by dropping down to 3rd and shifting back up to 4th.

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Current stable:
1995 E320 149K (Nancy)
1983 500SL 120K (SLoL)

Black Sheep:
1985 524TD 167K (TotalDumpster™)

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