No, this does not work on Merc's, and you do not need a flow sensor in the line. The engine ECM handles all the fuel burn data by tracking what it injected into the engine. The only system with this capability is the NorthStar Nav. You can only put GPS data into the Speedo and it does the burn logging.
http://www.northstarnav.com/
Also know that your engine is a 2000 and does not have the S/C Can Bus installed anyway. That is a different system that Merc made for those engines. It was the original Smart-Tach.