I think this is the part you're missing. I recall needing to change the production date so the car is coded for RLS vs AIC. There are 2 programs out there for determining the VO and modifying options. Look for ZEKO and "Decode BMW Order" by MALIBOO. You'll add option 0521 for Rain-sensing (maybe you already did this?). Then, update the production date in ZEKO to something in 02 or 03 (or use the date that was in the LCM IV) and I think you'll find the C3 key change to something slightly different. Recode with the new VO and I think you might be in business.

Did you save the coding from the LCM IV? You can learn some things by comparing the coding and VO that's stored in the LCM IV and the original LCM III.

I didn't struggle too much with updating the options and re-coding, but I had a heck of a time with getting rain-sensing to work (reading 255 values in the RLS module). Auto headlamp worked right away. Turned out that was the prism to windshield interface. I later found that Home Depot sells 3M VHB tape and works well for attaching the prism to the windshield.

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2001 x5 4.4 125k