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Q: how to read the codes on 1994 Mercedes-Benz E320

Rookie cbe0621eac06868b3efe0d8d1d3611e23c60d3114864ea2ec19a68cfbd3eebab
it has the lite in the engine compartment
No car image 94a1663db56199c5353592009e34aaa51078a2469bed068bb8d6f0ba43accf97
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I know that this response is late for the original poster, but wanted to provide an answer for any others who are curious about this topic.

As was mentioned, the 1994 e320 has a built-in diagnostic LED. The best example of how to utilize it that I have seen is at:
http://youtu.be/HCcmL8hLcDY

This YouTube poster (eallevato) has a lot of detailed information for DIY-ers on this year and model, so it is worthwhile the check out the other videos he has uploaded.
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