can someone tell where the cabin temp sensor is located?

It's part of the dome lamp assembly. The sensor is behind the grill next to the sunroof switch.

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Don't know if this applies. but thought I might mention it:
If your 300E is like my 300SE, it has an air suction tube behind the sensor, with a little fan at the other end that pulls cabin air over the sensor.
This fan is the part that usually fails, and makes the sensor ineffective.
My little tube runs all the way down above the passenger outboard kick panel below the glovebox, where the fan is located.
You can do a quick check of the suction fan by placing a very light piece of tissue paper over the sensor grill with the ignition turned on. If it sticks, the fan is running.

DG