Thanks both of you for the very useful information.
Here is the update:
Followed fivepointnine instructions and it was easy to get the DISA valve out. Had to remove some solenoid relay out of the way to get the lower small bolt out of the plastic panel/separator. The part had quite a bit of carbon deposits and one side had broken red rubber segment. Replaced with a brand new part but not much has changed. Still the same issue.
Took everything apart again, and also removed a cylinder part under the manifold just below the DISA valve. Looks like it is an idle control valve. The inner cylinder was full of carbon deposits and it was not moving at all. Sprayed with the throttle and intake cleaner, brushed all inside and moved it with the plastic tip. Repeated process multiple times till all clean and moving freely. At the end it could move just by quickly twisting in the hand and the inertia would move the rotating cylinder inside.
Removed spark plugs and they were full of carbon showing rich running condition. Replaced with new ones. Also changed the air filter at this time.
Put it back together and all issues resolved.
Got a lot smoother idle, with slightly higher idle RPM. When engaging from park to D or R the engine compensate a lot quicker to the load.
The response is so much better, real enjoyment as a little reward for the hard work. Seems that the gas consumption is somewhat better as well (29.4 on the highway at 55/60 mph speed).
So, supercourse was right that the code was misleading. I am somewhat puzzled why it would show pending code of intake valve "short to ground". I was scanning with Ross-Tech VW/Audi tool with an option to convert manufacture specific codes to generic ones. Still glad I replaced DISA as it seems to help with the response.
Great posts, thank you again a bunch for helping me out.
Last edited by bmw-x3drive; 08-14-2012 at 08:29 AM.
Reason: corrections 2