The multi-position selector with numbered positions and one position marked S and one marked N is R16. This sets the ignition module (EZL) to look-up different ignition timing maps. Position S is used for premium or super grade fuel whereas N is used for lower octane fuel. S is intended as the default setting whereas when travelling into areas with lower grade fuel N can be used with a resultant slight loss of power. Since MB vehicles delivered to the USA, Australia and a few other markets were intended to operate on fuel of a consistently and known octane rating, they had a fixed resistor fitted (usually tied against the engine wiring harness) for R16 in place of the multi-position selector. In Australia, due to our low octane regular unleaded, this value of R16 corresponded to that for position N.
Many owners in the USA and Australia have experimented with different value resistors (or no resitor fitted) for R16 in conjunction with operation on higher octane fuel. Some claim improvements others do not. I posted a couple of threads on the forums here as well as on other boards with the outcomes of my measured results. Generally speaking, only resistor values corresponding to either position S or N can be guaranteed to give predictable results for a particular model. Position S uses a higher value resistor resulting in greater ignition timing advance than position N. Note that R16 only affects ignition timing under high load. This corresponds to low vacuum (ie. vacuum disconnected) as can be seen in the figures quoted earlier in this thread by Mike65. Therefore any claims of differences under light throttle openings are only imagined. Other values (including resistor removed) may or may not give the expected results. Also note that positions S and N correspond to different numerical positions (ie. resistor values) for different engines. Some falsely believe that a higher resistor value (or R16 removed) gives the greatest ignition advance or that a continuously variable resistor (potentiometer) can be used to dial up whatever you wish. My measurements found that other values for R16 (including R16 removed) gave a "fault condition" of minimum advance (ie. retarded ignition). I operate both my KE-Jetronic engines (M102 & M103) with an R16 value corresponding to position S (originally used a value corresponding to N). I have done this primarily because I prefer to use premium grade fuel which is considered to be of a higher and more consistent quality here in Australia.
Incidently, the other multi-position selector you refer to is R17 which is for the fuel injection ECU and not intended as a user adjustment. If you wish to read my previous threads with my findings see http://www.peachparts.com/shopforum/showthread.php?t=67773 and http://www.peachparts.com/shopforum/showthread.php?t=67772
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