Sounds like you found the problem! :) What brand was that heater valve ??

Hope it solves the problem. My e70 was also very flakey and I went through most of what you did including changing the valve and tried replacing a few solenoids. Eventually had to replace the IHKA even though it had no codes with a used one and code it. I think my old IHKA just had some sort of failure and wouldn't control the valves. Note that the IHKA won't run the AC until coded so make sure you can code it if you change it...

The early e70 has the worst climate control setup I have ever had in any car... It is the thing I hate the most about it. Don't get me started on the stratified air being controlled in the idrive...

-Rich

Valve brand was SKP purchased from RockAuto 2 years ago. I typically never purchase cheap parts, so I cannot explain why I had bought the cheap SKP (maybe the others weren't in stock or something).

I have ordered a Beck Arnley replacement for CAD160 from RockAuto. I would have preferred Bosch (OE) or Mahle, but I cannot get one quickly enough, and it's not a great idea to go without heat in Canadian winter. FWIW, if you're willing to wait for the slow boat from China, you can get a Mahle valve for CAD70.00 including shipping via eBay. Local parts stores (Napa, etc.) were outright thieves, wanting CAD400-600 for off-brand crap. BMW genuine part from the dealer is about CAD240.

Yeah I recently got burned by a SKP secondary air pump and valve, total junk.

Yep - it was the heater control valve. I don't have the new part yet, and need the vehicle for the next few days, so I put everything back together with the cleaned up and dried out old valve. Heat works fine now.

Moral of the story is to not buy SKP parts.

It's too bad these valves fail just because the seals fail. I did find a seal rebuild kit on eBay.