Thanks - spent longer studying it this time. What I can see straight down through the hole is actual the end of the drive shaft and can see the black plastic ring on the back face of the back of the bearing. Drive shaft was new on the other side, hence why it looked shiny :(

Cleaned everything in there and span the wheel a few times with brake cleaner and cottont tips/toothbrush. I think the only thing I can try and do now is adjust the spacing of the sensor by putting a washer in there to bring it out a little further.....potentially file it down to put it further in (understand it is wishful thinking). If that all fails, I will be doing another bearing swap.

Cheers

You can try also to turn it slightly without the screw. (wrap with Teflon tape to make snug). That can effectively make the sensor closer to the ring.

You said bearing was replaced:, any chance rust prevented it getting seated completely flush?

I tried turning the sensor, which almost worked.....but I got worse errors. I turned it and secured the outside edge with the bolt. The error went away on start-up, but got the worse 4x4 DeActivated message, with the clunk and the ABS kick in and out - 5F1E. I opted to put it back and deal with the airgap error and am waiting on the new FAG bearing

I have a feeling the current bearing isn't seated properly or has a Mfg tolerance issue so it's not properly indexed to the wss. make sure there is no rust in the way of seating the bearing when replaced.

Thanks for everyone’s ongoing support. Seems like international shipping has gone back 50yrs and is via sea to Australia (it is that speed anyway) - I’m still waiting for the bearing to arrive.

I might as well order another sensor. Any idea on the OEM brands? Want as many issues removed when I put all back together.

Cheers

Looks like febi and vdo. I used knock off brand AIP from Amazon when I didn't want to wait and fully expected I'd be replacing soon but itt lasted until we traded in the car.

You mentioned possibly creating a thread detailing a how-to on this.
I have a very similar issue with my X3 E83 where I have tried pretty much everything and also came to the conclusion that a transfer of the signals from left to right logically should give me a definitive answer; if it was the sensor or the bearing - and I really would like to try this out.
But as the sensor connector pins are really deeply recessed I struggle to find a good method.
I was toying with the idea of visiting a breakers yard and see if they would let me snip off a set of connectors so that I could fashion an extension cable of sorts.
Do you have a DIY guide to this test that need nothing but wires? :)

Bearing replaced with the OEM FAG one. Cleaned the connectors on the sensor and swapped out the sensor……no more lights on my dash. I now have an AWD car again, with ABS.

Hooray! Thanks for the follow-up. Glad you got it sorted. :thumbup:

And the lesson here? OEM, FAG or KOYO bearings only, I guess! :rolleyes:

And also that I probably need to go a buy a workshop press to store in a small shed.