"nhdoc" is right-on when he states that if you check your oil level immediately after you shut-off the engine it will indicate low. Especially if you use synthetic oil.

The oil level sensor on my own car (95 E300D), is extremely sensitive as well. It will come on whenever the oil level is down even 1/4 Quart. This happened when I short filled the crankcase by 1/4 Quart after an oil change. At first I panicked, but now I know to keep the level just a hair below the Max line. My car does not burn any oil, so the light never comes on anymore.

Phil

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'95 E300 Diesel, 264,000 Miles. [Sold it]