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Jay,
I have a '97 E420 and I upgraded to 18" wheels with 235-40/18 tires. I have had no problems with clearance, however my suspension is stock. I don't know for certain about the '99 models, but for 97-98 the sport package was all cosmetic, save for the upgraded wheels and tires. I have seen lowered E's with more radical tire fitments, but I don't know if the cars had to be modified. I would assume the fenders would need to be rolled.
Did you want to lower your car for cosmetic or performance reasons? If it's cosmetic, the 18" wheels will make a dramatic difference in the look. I'm going on vacation for a week, but if you like, when I get back I can take some before and after pics.
Lloyd
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