I would agree the problem seems to be in the stalk/multi switch. The hard part is usually getting to it although I have not worked on a Mercedes one. I was recently quoted a price from the dealer for a new one for my C230 and it was pretty reasonable I thought. Something like 79.00. Mine is electrically fine but just mechanically sticky. In my experience with worn switches, sensors, senders etc on cars, it is unlikely that you will be able to service the assembly. If it is worn it has suffered subtle wear in some small areas that will be hard or impossible for you to improve. Even if you were able to get it working better, it likely would not be a lasting repair. I would quote out a new one and see how hard it would be to install. However, it is hard to say for sure without seeing the wiring diagram. I would guess that if it is worn it will exhibit some looseness. The activation when you use the turn signal seems to be a big clue but might not be what it seems. Sorry if this isn't really much help.

__________________
1998 C230 330,000 miles (currently dead of second failed EIS, yours will fail too, turning you into the dealer's personal human cash machine)
1988 F150 144,000 miles (leaks all the colors of the rainbow)
Previous stars: 1981 Brava 210,000 miles, 1978 128 150,000 miles, 1977 B200 Van 175,000 miles, 1972 Vega (great, if rusty, car), 1972 Celica, 1986.5 Supra