Okay, I did do a search and have just came up with question on problems with the system, or questions of exactly what it is. I want to have the same lowering options as the front for the rear also. Even though my system is working I'm at the 150k mile mark with no attention to it so....

I want to see if anyone has just removed the system, and if so does anyone have any instructions?

By asking questions from those who have done this here is what I got so far...

Remove the fluid lines from the rear reservoirs, the short lines which go to the SL rear shocks. Plug the holes with a threaded bolt of the appropriate size, and Disconnect the activation arm from the rear sway bar. When weight is put in the rear of the car, say, people or luggage, this moves the swaybar which in turn moves the activation arm, releasing the pressurized fluid (Pentosin 11, I believe) from the PS reservoir back to the SL shock reservoirs If you don't do this, any time you have weight in the back you'll hear this aweful squealing as the system is trying to shove fluid back there and, I think, the fluid is trying to blast past the valve triggered by the activator arm.
...Thanks to Dave for giving me the best info thus far

If anyone has anything more to add or any pics of the process post up! Lets get a much cheaper solution then just forking out the money to replace the system.

Here's some diagrams from RealOEM...

http://i62.photobucket.com/albums/h89/tnlkeys/Rearstabilizer.png
http://i62.photobucket.com/albums/h89/tnlkeys/RearSelfLevelingDeviceTubingRear.png
http://i62.photobucket.com/albums/h89/tnlkeys/Rearselflevelingsystemshocksdiagram.png

quite interesting. There are stock e38's that do not have the self leveling system? what is that set up? I too would like to know if anyone has taken out their self leveling system and replaced it with regular springs.

thanks
Joel

Bump up for info folks pass the word

#1 in the diagram, I'm pretty sure that's the actuator arm I was talking about, the thing connected to the rear sway bar. You've got to disconnect that from the arm.

#10 and #11 are the lines feeding the reservoirs feeding the SL rigs.

Thing is, you're leaving the system pretty much intact, not removing the system. The system thinks its still in business, but because you've disconnected the actuator arm, it thinks nothing needs leveling so it's content to just do nothing.

You're just getting rid of the whole shock and spring enchilada, replacing them with conventional springs and shocks. The goal is to get some nice springs, say set of four H&R or Eibach sport springs, and use them with Bilstein HDs all around.

Wish I could be of more help than this.