Finally heard from the dealer, I was away for a few days. Went down to pick up the new key, the service agent was looking for me, very attentive!

We went out to the car to check it out and presumably to close the service case.

He put it in, turned the key and - IT FAILED!
He tried a second and third time, it started a few times then again NADA!

And it was very hard to rotate in the socket (EIS) back to the far left to remove the key. It started the engine 4 or 5 times then FAILED.
So, we agreed the issue is some form of compatibility between the new key and the EIS, and he blamed the EIS, since there have been 2 new keys in succession that were flaky like this.

But why does the old key work 10% of the time - every time?
A close look and I see its slightly thinner than the new key fobs.

I give up, I'm not going the EIS route, I will use the new key as a spare in case I lose the old one.
Grrrrr

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'95 E320 Wagon my favorite road car. '99 E300D wolf in sheeps body, '87 300D Sportline suspension, '79 300TD w/ 617.952 engine at 367,750 and counting!