That was the very first thing I fix on my 1991 560 SEL. I wished I have a picture to show you.

There is a post on the trunk lip. When you close your trunk, this post pushes down a thin metal flap. Once this flap is down, a metal rod is then coming out horizontally into the hole of the post thus lock the trunk. My problem was that post has hit the metal flap so many times it has a dent in it. So when I close the trunk, the flap will not be depressed down therefore the rod will not come out.

To see what I am talking about, just use your key to open or lock while the trunk lip is up. Use a screw driver to push down the flap.

If your car has the same problem like mine, it will be an easy fix. Just unscrew the two screws holding down the post and move it out by 3 mm or so. best of luck.