dkveuro-
Have looked at the detailed electrical schematics for the 1996 W140 Coolant Level indicator and don't see any relationship to any other sensors or circuits except for the power side. (it shares a power buss).
Its a simple circuit (at least according to the documentation)... the indicator bulb has +12 to it whenever the ignition is on... the other side of the bulb completes a circuit to ground through the level detector in the overflow tank.
There's a "sliding" ring that floats over the sensor in the tank... is it possible that when the car lost its coolant previously, this ring has become stuck in the low position? I hate to ask, but have you checked the continuity of the sensor? According to the schematic, when the tank has coolant in it, the sensor should show "open".
If you want me to send you the schematic, send me an email with your return address. Its too big to post here.

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KenP

1996 S500 W140 Coupe