One problem related to transfer case has been reported for the 2006 Mercedes Benz E350. The most recently reported issues are listed below.
The contact owns a 2006 mercedes E350. While driving approximately 5 mph in reverse the driver heard a grinding noise. The grinding noise was also present when making turns at approximately 25 mph. The vehicle was taken to an independent mechanic for diagnostic testing. The mechanic stated the transfer case had to be flushed. The failure continued and the transfer case was flushed three times. The manufacturer was made aware of the failure and stated there was a manufacturers recall but the VIN was not included in the recall. The vehicle was not repaired. The approximate failure mileage was 33,000.