BIG WARNING. I ADVICE ALL E53 OWNERS TO CHECK THIS.

After I was done removing the glove box and the X806 checked out fine, i started to knock lightly against the ashtray and auto gear stick and seemed to be getting closer to the root cause.

I was already fumbling around in between and under the console with the gear knob removed and hand brake leather cover etc off, and luckily I was in a parking lot when I saw yellow sparks and smoke coming from below the hand brake. I turned off the car and removed the whole hand brake console panel.

As you can see the wiring loom which is part of the console itself was in constant contact with the metal brace and completely shredded the red-gray lighting wire as well as the brown ground wire and therefor shorted lighting to ground. Why no fuse blew, I dont know. But sure as hell the car was almost full of smoke.
The wiring loom seems to shifting back and forth when shifting park - Drive- reverse etc.

Planning to replace the wire and isolating and restraining it out of the way with cable ties tomorrow.