Hi, Tenn Jim-
If you copy and post something from another source, it's a good idea to say where you got it from. I think your post comes from this Website:
http://german.about.com/library/blmus_kinderPolizei.htm

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I wondered what the reference to Mo-Do was. Apparently, "Modo" is the Euro-pop group that made this recording in 1994 as a recitation with a musical background:
http://german.about.com/library/blmus_kinderPolizei.htm

The video gives these as the lyrics for the Modo recording:

Eins Zwei Polizei
Drei Vier Grenadier
Funf Sechs Alte Hex
Sieben Acht Gute Nacht

Ja Ja Ja Was ist los? Was ist das?
(repeat)

I didn't find the song in my modest collection of German songbooks. Are then any native German speakers here who grew up with this rhyme, or it is a Modo composition?

-Joe-