I have an m103 which I recently replaced distributor cap, rotor, wires and spark plugs on. The other night I popped the hood when it was dark and noticed some arcing between the metal shroud on the spark plug wire (the part that goes over the spark plug tip) and the engine block. Has anyone experienced this before and if so what does it mean? Did I buy defective equipment perhaps?

This would be the plug connector. MBZ connectors have resistors in them, so it's possible that one of the resistors is working overtime, but more likely that not, you have a defective wire or two. My first question would be "Where in China are they made?"

There should never be a need to replace MBZ original plug wires anyway, unless someone has broken one. They are all copper and usually last forever. Now the connectors are a different story. If there is ever a continuity problem, the connectors are usually the culprit.

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Or it might be corona, were the sparks very short and fine with a deep blue color? More of a color than a actual spark.