If you can successfully register the unit with the serial number & password, and download the update software, it doesn't matter if you format the SD card or not.  It will successfully update, or you can start with a new SD card.  I preferred to use a new 16GB card in the event that future updates may exceed the OEM 8GB card.

 Once you register your device, you want to download the "Autel PC Suite" (done at pro.auteltech.com).  Make sure you get the correct software for the md802.  Depending on the age of your scanner, there may be updates for both the scanner and vehicles (system and manufacturers).  The stock SD card will have system files and manufacturer files on it.  If you format the SD card all information will be erased.  It really isn't necessary to erase, unless you want only the Benz files on the SD card without other manufacturers.  Erasing the error codes won't damage the vehicle.  However, if the issue causing the code isn't corrected, the code will return.

 No problem.  But to be safe, I would make sure you can register it and receive updates prior to formatting.  Good luck.

Download the Autel PC Suite.  Once installed, the SD card should be plugged into a USB reader (or USB slot if built into the PC) for programming (not into the MD802).  It will then update the system software.  Once the system software is installed, it will prompt you to update the manufacturer you choose (benz in your case).  As a warning, Benz is a long, long, long procedure to update (at least from my experience).