s=sports, e=economy, m=manual.
Usuallyit is in e=economy. If you switch to s when engine is running, in the dashboard on the check control the e will change to s. same is with m. but the switch itself is always going back to e which is in the center. When you want to switch from s to e: push the switch downwards and e will come in the dashboatd.
When you switch off the engine, and then start the engine again, automatically the gear switchtes to e, which is the default position.
Did you see the gear and mode indication on the cluster at the lower check control? If not, your car will have transmission probs. But that should be easy to solve by replacing or cleaning the selector switch below the center console next to the shift handle.
The switch S and K: that is for the EDC system. Electronic dampening system. S stands for sports, and K for the German word Komfort =comfort.
There is a online owners manual here. Just use the seArch on top and type in owners manual and you can download it. Study it carefully, a lot of gimmicks and there are people which own the car for years already and they still find evert day a new feature.
One final word to EDC: EDC shocks are very, very expensive, they can cost more than the whole car is worth now.
Therefore check them. But you can eliminate the EDC system and install normal or sports shocks and springs.
But it would surprise me a bit that a 1989 525 would have EDC.