Thank you for that information. Out of curiosity why would the dealer say that it could not be done? They told me it couldn't be done as well so I didn't think it was an option. If I somehow managed to order the MM parts would MB install them for a fee? Or would I be able to find some MB certified person to install it outside? Also, I can see the problem with trying to fit a 7'' aftermarket in the 5.5'' spot, but could that whole top part of it be taken out so that it would be able to accommodate something like that?
In any case it sucks that I'm not alone in this and there aren't too many solutions. Sorry for all the questions
The big issue with changing to the MM system is the harnessing.. The wiring for the amplifier and flip-up LCD is not present on the non-MM system and that wiring is part of the vehicle main harness. The dealer will tell you that you need to change out the harness and cost for that part will run about $3200 (thats in addition to the LCD, MM command, and amplifier which are another $6000 or so). So its not that the dealer cant do it.. they simply have no experience with doing those change-outs. Contrast this to vehicles like the ML or GL where the audio50 and command radios use almost identical wiring, in some cases you literally unplug one and plug the other in so the cost is less.
We specialize in doing these types of changeovers, we add things like sat radios and voice command and telephone when the dealer says you can. I just did sat radio on a w203 C class where the dealer gave up after 5 hours and told the client that it was impossible. The guy is now happily driving around listening to howard stern

The reason we can do this is because we maintain special relationships with the german suppliers and can get the factory connectors and build the missing harness elements as well as version code the vehicle for the different parts. This ends up saving quite a bit of money since the added-in sections of harness cost significantly less.
Of course with the W204 the issue is still price.. The model is so new that there are no repaired radios in the supply chain to be had for a discount which means you end up paying full price through parts for the MM radio, LCD, and amplifier. as i said thats about 6K right now so changing to MM radio is not exactly practical right now....