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I've not heard of the insulation problems showing up under the dash. They usually are in the engine bay where heat and oil can damage the insulation.
Corrosion can happen with the connectors on the back of the fuse panel as well as on the fuses and fuse clips. You might try this:
1. Disconnect the battery ...IMPORTANT!!
2. Remove the plastic kick panel by the fuses by lifting off the plastic sill piece, pulling off the trim that covers the body edge from floor up around the door opening, pop out the small plastic fastener up on the side of the kick panel with a screwdriver, and remove the rubber handle pad on the air vent lever. Remove the kick panel.
3. Now you can unscrew the screws holding the fuse panel and get at the connectors on the back of it. Pull off ONE CONNECTOR AT A TIME, clean the spade connector tabs with your Dremel. With a pliers, crimp the connector on each wire so it grips the spade tighter, lightly coat the spade with SylGlide silicone grease, and reconnect. Do this for all connectors.
4. You've already cleaned and tightened the fuses and holders, but put the grease on them also. This will head off future corrosion.
5. Now remount the fuse panel, connect the battery and see if the engine starts.
Note that sometimes a water leak from the drain holes below the windshield will let water down on the fuses. If you have evidence of this, you need to stop the leak. I had this happen on the passenger side of one of my 240s. There was no way to reach the site of the leak from inside so I just had a windshield shop fill the drain channel with urethane caulking. This stopped the leak.
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