Brake Warning Light Switch - check the bracket first
My brake warning light had been on for a while and i finally decided to do something about it. Pretty common problem on all E36s even M3. After reading a few threads and there is even a DIY on Pelican Parts for this repair.
Upon receiving the new switch, i installed it and low and behold I had the same problem. I ohmed out both switches. What i discovered was both switches worked the same way meaning that my old switch was not bad.
Upon further inspection i notice that the bracket holding a small metal piece which makes contact with the brake switch was misaligned. This is hard to explain so I have included a series of pictures to show you what the problem is. This part is behind the bottom dash panel under the steering wheel and i found that there is a metal knee bulkhead there held by 3 bolts that is best to remove as well to get access. So how this gets misaligned is beyond me except it is a slide on type fastener rather than a bolt so it just probably bends over time.
I used a screwdriver to slightly bend the bracket the switch is held by and the metal piece the switch center makes contact with. I just moved the switch bracket up slightly and the piece the switch makes contact with down slightly and now the switch works perfectly. Warning light is gone.
So I would suggest before you automatically just buy the switch you check out the alignment of the bracket(s).