I've never heard the part of holding the brake pedal for 10 seconds, but I don't think it can hurt either. I've yet the check the ECM/TCM area, but mine stopped giving me this issue the following day, so who knows for sure. I'm still curious to see actual pics as to where the water is getting in at so I can remedy it when I get back home.

Something else I discovered that's a "big deal" - I cracked open the case on the TCM, and there was a LOT of corrosion on the circuit board, between the pins on the various chips - this is as important to remove or more than what builds up on the pins and connectors. I'm about to pull the ECM and do the same to it, I bet it will be bad too.

Sounds like a can or two of Radio Shack electronics parts cleaner and some dielectic grease might be in order.

Took the TCM apart, there was a lot of corrosion on the inside too, all that has now been cleaned up - but still the FSP message continues. I've even taken the ECM apart, it was clean however. I'm a bit stumped, wish I had a TCM to try rather than buying one outright, as there may be another problem.

I cracked open the TCM, and cleaned it out inside - it also had corrosion there. Reverse now works, and when I first start out, the tranny goes back to normal - but soon enough TFP returns... so now I'm a bit stumped. It does start to stutter around 60 km/h, and after 5 sec or so of that, once I slow down - then TFP turns on and I'm back to 3rd gear only. I need to get the OBD read again, me thinks - I hope there's something to go by... any thoughts, anyone??

I cracked open the TCM, and cleaned it out inside - it also had corrosion there. Reverse now works, and when I first start out, the tranny goes back to normal - but soon enough TFP returns... so now I'm a bit stumped. It does start to stutter around 60 km/h, and after 5 sec or so of that, once I slow down - then TFP turns on and I'm back to 3rd gear only. I need to get the OBD read again, me thinks - I hope there's something to go by... any thoughts, anyone??

PROBLEM RESOLVED!
 

I believe that many owners are getting shafted out there on rebuilt transmissions when it's simply not necessary:

First off - GET A OBD reader! It is essential if you want to figure this stuff out on your own. Deal extreme have Carsoft 6.5 and all the cables included for $60 - you can't go wrong.

Symptoms:
Transmission in fail safe mode
Reverse gear stopped working - when put in reverse, it would either do nothing, or actually shut off the engine!
hestitation around 60km/h, transmission felt very rough

Steps taken:
Battery was weak - replaced it with a Motomaster eliminator $160
Removed and cleaned the TCM and connectors - actually open the TCM, and use electonics cleaner to remove any corrosion. Check the ECM while there.

Was still intermittent going into TFP mode, and the check engine light on - used my OBD, and read P0721 code on the transmission. This is a pulse generator, crank shaft that take 10min to remove/install, it's $130 aftermarket part.

Cleared the 'check engine' code with ODB, and HOLY CRAP - my tranmission is working 100% normally again.

BMW wanted $3000 for a new TCM and 7 hours labour to replace all the connectors. That did not include the pulse generator or labour for that either, in fact they never even mentioned it as being a possibility.

All told, I saved about $2500 - $3000 on doing this work myself. PITA, yes - but well worth it.

If a moderator reads this, perhaps an entry in the 'how to' section under tranmsissions might be appropriate?

Post like these where BMW diagnostics vs trial and error lead to the real issue. I had a similar situation w/ my 7 where it wouldn't run, had it towed to a shop who wanted to do about $3500 worth of head removal, carbon cleaning, fuel system replacement to discover on my own time (in their parking lot) that it was a clogged cat once I removed the pre-cat 02 sensor. Drove the car (a 1" hole does make a lot of noise btw) to the exhaust shop, and $200 later I was running perfectly and back on the road again...and just like your situation, NOTHING they suggested I do would have even gotten them in the ballpark of what wsa wrong. Threads like these make these kinds of forums invaluable.

Glad you sorted it out and thanks for sharing.
Going back to the main title of your thread "unable to communicate with .....over Obd",I think a big thanks to M5James is also in order,since he suggested you to use electrical contact cleaner spray on your corroded ECU connectors/pins,which in these cases is imperative..:)

OK, what is TCM? any picture?