The bottom of the fill hole is the proper level. So, fill it untill oil just starts to spill out, then cap it off.

Diff fluid always smells nasty. Even fresh gear lube, despite its nice color, smells pretty foul.
Any brand of gear lube is better than not changing it, but synthetic is better than conventional oils. I'm sure Mercedes has synthetic gear lube they will sell if you want to be a purist.