Well this issue is sorted, I am now enjoying ice cold AC in my e53, although typical its fixed after the heatwave we had here in the uk...

Anyway the compressor had failed which seems like a common Calsonic Kansi issue, replaced it with a new unit and all is good! what a pain, but glad I stuck with it and the wild goose chase of red herring issues.

Hopefully this thread will help another poor soul out there with similar issues, just took some patience and logical thinking to solve this one.