That's where the ignition module and coil are located. I'm driving my 260E in the rain today. Went out to look and there's no water inside the engine compartment on either fender. Engine heat would dry the water up pretty quickly. Is it possible there's another shield that's missing? Or a hole in the fender?

Check the integrity of all the insulation and connectors and maybe think about a little "dry-wire" spray. IIRC it has a plastic coating that might help.

Wetly,

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Norm in NJ
Next oil change at 230,000miles