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I had something similar with my C63 last year, found out on another forum its usually a pebble that somehow gets caught between the pad and rotor. Amazing how something so small that it could actually fit in there can make so much noise. the solution was to find an empty street/parking lot and do some hard breaking to try and work it out. Worked like a charm for me, I actually heard it fly out. Break pads are pretty tough, I don't think anything could embed itself into them, but I could be wrong.
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