Unfortunately, that is your first problem, your generic code reader.

The speed sensor is inside the transmission case as well, near the valve body. You need to diagnose the transmission. If you want to open it up, you will require a proper service manual from ZF. You can test each harness, sensor, and solenoid. But it may not be an electrical problem, it may be a mechanical problem with an electrical symptom. A full diagnosis will be required to determine that. Also, I would look for heat related damage to electrical components inside the transmission as well as any obvious wiring harness problems externally.

There are some good threads on this site showing transmission overhauls on the ZF boxes.

__________________
2007 X3 3.0si, 6 MT, Premium, White

Retired:
2008 535i, 6 MT, M Sport, Premium, Space Grey
2003 X5 3.0 Steptronic, Premium, Titanium Silver
2002 325xi 5 MT, Steel Grey
2004 Z4 3.0 Premium, Sport, SMG, Maldives Blue