Steve,
welcome to the forum! Thanks for your detailed description of the problem. Most shops would not know what to do with this case. A large number of shops would tell you to get a new soft top controller. Those shops with Star Diagnosis would eventually point at the front locks. Almost any shop would tell you to replace the front locks, because they don't know about the ultimately simple adjustment procedure below.
The key to the description is, combined with the new canvas, that the
soft top will not close all the way - it reverses its closing cycle right after or shortly before the rear locks are fully latched. One of the locks does not give the controller the signal that it is fully locked, and that is what makes the chime go off. If a front lock signals that it is not locked while the canvas is going down in the rear, then the controller will reverse the closing of the rear bow until the front lock gives the proper signal.
Almost certainly, the problem lies in the micro switch(es) on one or both front lock cylinders needing adjustment. The new canvas is tighter than the old one, and it pulls the roof up a bit more in the locked front latches.
The same thing would happen if folks replaced their front lock cylinders 1298001672 and accidentally bumped the lever on the front lock that triggers the micro switch.
Here is how to check whether it is one of those micro switches needing adjustment, and which one:
After the top has locked in the front, put the soft top tool (6-mm Allen wrench) into the front lock on one side, through the hole in front of the visor. Turn the wrench such that it locks even farther, taking the play out of the lock. That direction is different on the opposite sides, by the way. Holding the wrench in the far locking position, push the soft top button forward and check whether the top now fully closes in the rear with the windows going up afterwards.
Try the same on the other side.
If you find that holding the wrench on one side does the trick, then that
switch needs
adjustment. I will explain the
procedure below and include some pics that should illustrate what I'm talking about. Once you know how to do it, it's quite simple!
(You might get away with only adjusting the prongs on your soft top, following the instructions in
http://www.benzworld.org/forums/r129-sl-class/1602807-soft-top-front-lock-adjustment.html, but that would likely be only a temporary fix and eventually result in the chime going off every time you drive over a bump.)
Note that you need to re-install the windshield header panel before the top will operate on model years '95+. Also, be careful not to pull on the wires of the magnetic sensor that is mounted in the windshield header panel on model years '95+. See page 3 of
http://www.tophydraulicsinc.com/R129 Front Locking Cylinder Removal.pdf.
The micro switch on the front lock(s) gets pushed DOWN by a lever when the lock is OPEN. There is some reverse logic involved here, so take it slow and read very carefully.
As the lock receives the soft top in it and locks, the small lever that is pushing on the switch releases just enough for the switch to click open once the lock itself is in closed position. If the lever has been bumped or bent when the front locks were installed, or if the locks have developed play over the years, then oftentimes the lever is not pushing down far enough by the time the lock is in the final (resting) locked position. This resting position can be different from the locked position without the top being latched down by the lock.
In your case, you probably have to bend that lever up just a tiny bit (1 mm or 1/32 inch). This adjustment can be made without removing the lock. Remove the windshield header panel and adjust the lever above the micro switch until it barely touches the switch when the lock is closed. Note the play in the lock - you need to recreate the position the lock would be in if the soft top was closed and pulling up on the lock. This is shown in the third photo with the caption "Front lock in real life with the top pulling". Ideally, the boot of the switch will just start bulging when the lock is in the "real life closed position".
Hope this helps, and please let us know what you find,
Klaus
Top Hydraulics | Rebuilt and Upgraded Convertible Top Cylinders, Pumps, Hydraulic Lines - Top Hydraulics, Inc