Hi and welcome to E38 land where every automotive evil spirit has it's play ground. There are drains in the heater box (to allow for air conditioner condensate). A small leak (enough to smell) could evaporate before hitting the ground - engine and gearbox heat etc so carefully check the gearbox for water trails. Other than that it's heater matrix out time. Sux to be you. Try e-bay for a manual, maybe on DVD. That's where I got my TIS.
Good - Fast - Cheap: Pick any two.
E23 735i; E32 735iL (X 2 - 1 Alpine White and 1 Glacier Blue); E34 535i; E38 735iL; R50 Cooper; R55 Cooper Clubman.
E21 318i; E30 318i; E32 735iL; E34 535i; E38 730iL; E53 4.4i