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I have a 2001 4.4i also and have had to replace both the sensor and the reservoir. The sensor is located on the bottom rear of the reservoir. You'll see electrical wires leading to it and an electrical connector (white) plugged into it.
There is a TSB on the OEM mounting bracket for the reservoir. It was moulded such that it puts pressure on the sensor connector and can cause erroneous signals. My bracket was R&R'd under warranty, but I still kept getting the low coolant warning. The sensor itself was replaced and the problem went away for about a year, then returned.
I talked to the dealer's mechanics and was advised that sometimes the reservoir itself fails (they couldn't explain why). I purchased a new reservoir (cost is about $75) and R&R'd it which corrected the problem.
I then cut the failed reservoir apart to see how it worked. It has a cylindrical magnetic float (which evidently deteriorates with heat) which moves up/down with the coolant level around the sensor which is in a tube moulded into the reservoir. The sensor has a set of points which the magnetic float can cause to open/close when they are in proximity of each other thereby sending a signal to the X5's computer.
All of the coolant hoses have quick release connectors so to access the sensor and/or remove the reservoir is VERY easy (MAKE SURE THE ENGINE IS COLD), but BE VERY, VERY CAREFUL IN HANDLING THE SMALL OVERFLOW TUBE that goes around the top of the reservoir as it is plastic, aged and extremely brittle. It will break just looking at it; mine did, and I then made my own out of 1/4" polished aluminum tubing - heavier but won't happen again!
Additionally, I would hazard a guess that the oil sensor probably works on the same basis as the coolant sensor.
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