Is there a way I can restore this headlight and keep it from peeling?

 

I've moved your question from X260 to X250 forum. This is the place to post questions about your model.

Graham

 

It happens to a lot of cars on hot climates that is parked directly from the sun. Here in Texas, it is too common. The UV clear coat protection peels off for several years on cars parked without a garage. If this happens to me I will lightly sand with fine grit and buff to take the old clear coat out and do a re-coat. The other lens needs to be done as well to match the two together. Good luck