Ah, let's start over here...
Here's the thread where I learned about the tumbler and column interaction. The pin you want to grind down just sticks out of the side of the lock, and has nothing to do with the tab that comes out at the end to lock the column in place. Look at the photo's of the steering lock in that thread and this will make more sense. All you should need to do is turn the key to the right, press the retaining nub in, and slide out the lock (with tumbler attached) after disconnecting any wires and vacuum lines.

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1987 Mercedes 300D

I tried to get the tumbler out. Put the paper clip in the hole, got it in the right spot, and started to unscrew the black cylinder while pulling a little on the key/tumbler. The black cylider kept turning until it wouldn't come out any further because it hit the rubber of my key. I got annoyed, screwed it back on, and went inside to do more reading. Someone posted that you may have to pull the key out of the rubber. I don't want to do this because my only other key doesn't have the rubber. I should note that although it doesn't have rubber, it's still just as big as the original.
So I went back to bgkast's post. It turns out that my problem is really word for word what your problem was. You wrote "I still think the steering lock may be at fault. I was playing with it today and try to insert and turn the key when the wheel lock is not engaged there is no problem getting the key to turn. If however I turn the wheel until the wheel lock clicks and engages I can not turn the key." It's the same exact thing with mine.
So, I pulled the instument cluster out to have a look at the lock. Man, is it daunting. I don't think I'm ready for this kind of project. I don't even know where to begin - even after all the reading I've been doing on here.
I had the instrument cluster out, so I figured I could at least change the dash bulbs. I used the whole computer year-make-model thing at the local auto megastore about a week ago and bought some bulbs. Turns out they're not even close to being the right ones. I put the instrument cluster back in, having done nothing.
I wanted to at least get one thing accomplished today, no matter how small. So I had some new fuses which I switched out with their old counterparts. Somehow this activated the car alarm. Luckily, I have the remote for it, but now I have to hit a button before I close or open any door.
I gotta say, this is getting pretty disheartening. I'm probably going to call a mechanic tomorrow to get a quote on the steering lock - unless anyone on this forum lives near Philadelphia and could help me out. Bummer.

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1983 MB 300SD Turbo Diesel

you may be doing this and if so i'm sorry to bring it up but i have not seen it in any of your posts.if i turn my wheel til it clicks and locks there is no way in hell my key will turn(and it's a new ign lock assy and tumbler),unless i grab the wheel and take pressure off the locking lug.we had this problem in our shop for years,people would go to the post office and hit the curb and then shut the engine off and take the keys,when they came back out they couldn't turn the key,we would go down hold the wheel to take pressure off the locking lug and turn the key,let go of the wheel and it would turn back 1/4 turn.also to remove the key it has to be in position 1 and if you use a paperclip you have to really press it in there as it will go in 2/3 the way and you think its in.as you turn the locking collar out the whole tumbler assy should pull out with it,if not the pin isn't fully depressed. and 86 dollars for a vin coded tumbler and key is correct,you need your drivers license and registration before they will order it though.

It's not that hard. You can do it. While you are unscrewing the metal collar you should be able to pull the tumbler out at the same rate it is unscrewing so you will never hit the key. Then remove the lower dash cover, lay on your back and unscrew the clamp. Mark the vacuum lines and disconnect them. Here is a picture to help you find the pin to push. It may help you to loosen the dash bolts to get the lock out. Once it is out unplug the wires from the buzzer switch and remove the screws from the back of the lock to get it free from the wiring harness. See, that wasn't so bad.

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1979 240D- 316K miles - VGT Turbo, Intercooler, Stick Shift, Many Other Mods - Daily Driver

1982 300SD - 232K miles - Wife's Daily Driver

1986 560SL - Wife's red speed machine