I don't know the answer to your question, but I have a similar problem. Previous owner of my 96 C280 got the antenna fixed before sale and I can get almost no radio reception. It seems like though the antenna goes up and down, the head unit isn't receiving a signal from the antenna. So I'm kinda in the same boat.
Did you check the antenna connections in the back of the head unit? Should be the largest plug on the left hand side. I'd say trace the line back from head unit to antenna for obvious flaws, but God only knows what that might accomplish. You can get FM reception ok?