Hello,
Having issues with my 05 525i with an m54. Everything in my research points to a thermostat except for the fact I still have hot hot heat..
-Symptoms-
Rough idle at times, as if it's running to rich.
Also, it will run rough with my foot on the gas and stumble intermittently but as soon as I'm off the gas it will run smooth. (Getting to much fuel? Because the thermostat is transmitting the wrong temp to the dme)
I've got an increased emissions warning
, I've also got a engine malfunction warning that says to drive moderatly so I don't harm the catalytic converter. ( my thought here is unburnt fuel will harm it..)
Sometimes while I'm on the highway, the car will loose all power and the rpm will float from 0-300. I'll have to turn the car off and on and then it will go away.

Is there a sensor as well? I see the t stat housing has an electrical connector.
I'm also going to look into the O ring for the sensor on the lower coolant hose..
Help,

 

Those don't look like bad thermostat symptoms to me, besides, it's designed to fail open. Instead of guessing, pull the codes. If it's the thermostat (doubtful in my opinion) you'll have a cooling circuit fault code.

 

It is quiet possibly a faulty sensor. You need to read the codes with a BMW-specific code reader and start from there.

 

I just had this problem. Changed my waterpump + thermostat @ indy shop. Charged me $950 for everything

 

The electrical connection you're seeing at the thermostat is there for MAP cooling control, it isn't a sensor. There is certainly a coolant temperature sensor. Do you have access to INPA and/or a way to monitor coolant temperature while driving? I agree sounds like it's running way rich.