This is a great post. I wish I had the time to do some search on the internet as some of you guys did. I know know where to find the information next time around.
From various posts I could see that this FSR unit is pretty easy to break. I wonder if any forumite could relate to what I just went through.
My wife took my 2001 540i for a regular maintenance visit to the local dealership (Otto BWM in Ottawa). The AC and fan were working fine in the morning. We didn't have any problem at all with the air and AC.
We did the usual maintenance (oil change, coolant flush, etc). When my wife was driving it back home after picking up the car, she notice nothing was coming even after she turned on the AC and the fan speed to maximum. I suspected the mechanic forgot to re-connect some electrical wires after he did the work, so I met my wife mid-way and drove it back to the dealership.
Two minutes after I explained to the receptionist guy, he came back to explain to me that the "fan electrical control unit" was broken and went on to explain to me the various symptoms with it prior to the break down. I explained to him that it was working fine up until my wife brought it in for service this morning. Anyway, long story short, I reluctantly agreed to have it replaced because it just happened that day was super hot and I realized I had to get it fixed one way or the other. At the end, the cost was 200$ -- 100 for the part (the FSR unit) and labour.
That guy swore that the works done earlier had nothing to do with the fan/AC system so they refuse to take responsibility. I am still convinced the dealership screwed up the unit but I couldn't find any proof. I would like to hear if someone has similar stories about this.