Thank you for all the suggestions and ideas.
Had this of happened some time ago i would have been more than willing to give it a go myself - but I simply do not have the time nor space to do it at the moment, hence I needed a willing garage to take the job on.
The garage who has the car at the moment has tried to remove it after soaking it in WD40 over the weekend, but came back to me today and basically said there's no way he could get it out without dropping the engine and gearbox. There's no space to drill it out.
The Mercedes Indy who first (and secondly) attempted to remove it has really buggered the sensor (physically) - the part of the sensor that sticks out of the gearbox is actually DETACHED from the part that sits inside the gearbox - it is held together only by electrical tape/ cable ties. He's baffled at how the car even starts given the condition of the sensor.
Bearing in mind that when I dropped the car off at the Indy for the first time, the sensor had ZERO physical damage (only a fault code that was causing a slight lumpy idle), and then the second time I took it back to them there was only minor physical damage (which they had caused on first attempt of removal); to say I'm disgusted at this particular Indy is an understatement.
They hadn't even told me that they'd cable tied/electrical-taped the sensor back together.
But anyway; what it boils down to is that the sensor needs to be removed, and to do so the engine and gearbox needs to be dropped. The garage that has the car now doesn't want to take the job on as he's a one-man band and it would take up far too much of his time.
I've spoken with a guy at my local Mercedes dealership today (given my other car's been in their possession for the last 9 months or so I have a fairly good relationship with them)...
He reckons this will set me back around £1600 (I'm now awaiting an official quote from him). Seemingly I have no choice but to pay up as I need the car back ASAP. Renting a car (which I've been doing for around 2 weeks now) isn't cheap.
My contact at the dealership also confirmed my initial point made to the Indy - they broke it carrying out the work which THEY ADVISED needed doing to 'get the job done' (after they initially failed to remove it on the first attempt). They didn't advise me that it was 50/50 whether they could get it out the other way, and as such they should have just put it right, even if they did end up out of pocket.
The dealership confirmed that's what they would have done had I gone to them in the first place.
I've also had this confirmed by someone selling the exact same car on eBay - they put the car in to their local Mercedes dealership (other end of the country) and were quoted £500. They got it out, but not without dropping the engine/gearbox first - yet despite the additional labour involved of dropping the engine/box (which would have came to around £1600), they still only billed him for the £500 of which they initially quoted.
So there you have it. I'm aware not everyone agrees with this, but hey - everyone's entitled to their opinion. I will however be pursuing the matter with the Indy because it's not fair I've paid them (twice) to cause physical damage to this part and now I'm left with a £1600 bill at Mercedes rather than the £500ish I could have paid to them in the first place.
On top of that I've also had to pay for a hire car and also had to pay the Indy (twice) to 'attempt' removal of the part.
Hindsight's a wonderful thing and of course I now wish I'd taken it to the dealership in the first instance; but at the end of the day I didn't take the car to the cheapest option available to me - I went to apparent 'specialists'; an independent Mercedes garage who should have firstly advised more clearly from the outset, or at least put things right after realising they'd advised me incorrectly and furthermore, causing additional damage to my car.
Lastly - to be clear once again - my issue with the Indy is not that I had to pay for their time (eventually at a reduced rate), but more so that the car left their premises not once, but TWICE in worse condition than it was in when dropped off - despite going only on their advice.
Forcing me to pay for them to cause said physical damage on two occasions was just an insult to the entire situation.
Anyway - will update once I've sorted things with the dealership (unless I need to sell my fingers as well as my legs to pay for the repair).
Thanks again for everyone's ideas/input/opinions.
