Transmission Problem -very odd
 

I have a 1987 300D, the transmission will not engage at all when shifted, turning the key off and on several times it will finally start working, and it works perfectly and shifts perfectly. This inclines me to believe that this is not an internal transmission problem but more of an electronics problem. Is this trans electronicallly controlled, it looks to me like it is cable shifted, so I doubt this, what else could be causing this? I am at my wits end with this thing.

You could have a valve body that is acting up. When the car shuts down, the engine shakes quite a bit. This could make it work on and off again.

Also, the torque converter could be acting up.