I didn't see this in the FAQ or the archive, so.....

The diagnostic unit on my '90 240 had always been flaky. Sometimes it works, sometimes not.

In reading Bentley, there is a procedure for testing the unit. On testing, it showed no continuity through the switch when it was depressed. In Bentley, it says "replace the unit".

Remove the unit from the fender wall. The there is a plastic cover that covers the button. There are two small tabs, facing inward. Depress these with a small screwdriver, and carefully swivel the plastic cover away. The button will now come out. BE CAREFUL NOT TO LOSE/DROP THE TWO SMALL SPRINGS ON EACH LEG OF THE BUTTON! Luckily, I had a magnet handy 8-)

On both the bottom of the button, and down in the test unit itself, are the contacts. Mine were filthy. 15 seconds with a Dremel, reassemble, and all is well!