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Some people have stripped and repaired the loom but you will need a fair amount of time on your hands to do it properly (if it needs it).
The issue is that the shorts cause damage to the ECU (in particular the output stages driving the coils) if not fixed.
You may well be fine but for this age M104 its a sensible first check.
Hopefully the previous owner was scared by a loony quote from a Merc main dealer and it will turn out to be plugs/boots/leads or something nice and easy.
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