Thanks to you, as well as others that have contributed to this thread. I too have been fighting vibration issues with my 2002 E55. I've recently replaced motor mounts (the driver's side was ruptured and the passenger side was in poor shape); both flex discs; the transmission mount; the center driveshaft support bracket and bearing; and had all four tires re-balanced. I'm not sure if the parts other than the motor mounts needed replacing, but I'm glad I did while there.
These changes helped greatly, but didn't totally eliminate the vibrations. I saw this thread and thought I would remove the spacer and see if it helped. It did! Just took the car for a thirty minute drive and it such a noticeable improvement! I believe I still have an issue and may need lower control arm bushings. But I'm thrilled with the ride and will look into replacing the LCA bushings at a later date.
I too don't totally understand why removing the spacer helped. Is it to compensate for the new motor mounts and slightly altered angle because of them? If so, it seems to me there would be a lot more talk about removing and adding spacers with as many motor mounts changes that must happen with W210's and other models. At any rate, I'm just glad it helped.
Some notes about removing the spacer: I removed the small panel that sits just inboard of the passenger side rear wheel. It is held on by four 10mm nuts. I also removed the bracket that supports the panel. It is held on by two 10mm nuts. Removing this panel just gives you a little more space to work, plus it allowed me to better see my headlight level mechanism which I thought may be broken (it was o.k. and I found the front level mechanism broken).
You need a 8mm hex bit to remove the bolt that holds the spacer in place and my car had a 17mm nut on top. It is a little difficult to secure the top nut in place to loosen and tighten the bolt. I was able to do it relatively easy using a 17mm ratcheting wrench with an articulating head.
A couple of pics. My spacer had 4 notches so I guess it is 4mm.
Thanks again for posting this information!