Bernie:

Stick the cable on, run around and lock, unlock the door, and see if the alarm stops. I'm pretty sure it will. If it does, then tighten the clamp. If not, I'm out of ideas, I'm afraid.

From there, switch the ignition on and see what happens. I cannot imagine what damage you could have done by touching the negative battery cable to the hood with the positive connected.

Note that all sorts of strange things can happen on these cars with low voltage -- on the W126 chassis, unswitched operation of the wipers is a common indication, along with an alarm or horn, that the battery is low or dying!

Peter

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1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!