My car was throwing a camshaft position sensor fault code, so I bought a replacement sensor and O ring and tackled the job myself. Here is a step by step with photos and some other small things I ran into doing the project.

Make sure your ignition is off and remove the top engine cover.
Then, disconnect the mass air flow (MAF) sensor.
http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7859.jpg

Disconnect the intake air temperature sensor.
http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7860.jpg

(I later realized that all you have to do is compress the wire clip with your thumb and slide the harness off.)
http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7861.jpg

Remove the air filter housing mounting fastener (10mm nut-driver).
http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7864.jpg

Loosen hose clamps (common screw driver or 6mm nut-driver). (Notice the orientation of this clamp's screw, indicated by the yellow arrow, and it's proximity to the fan blades. I will address the obvious, potential problem later.)
http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7865.jpg

http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7863.jpg

http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7862.jpg

Remove the air filter housing and MAF. (Although unecessary, I found it was easier to work the housing out if I took the upper half of the housing off by disconnecting the clamps and exposing the lower portion of the housing containing the filter.)
The yellow arrow indicates the intake camshaft position sensor and the red arrow points to the air silencer box.
http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7866.jpg

Although the manual indicates a specific tightening torque of 3.5 ft-lb (5 Nm), there was no mention of a special tool for this project, so I just used a 5mm Allen wrench to remove the sensor and was careful to note how much force I used to break it loose.
http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7867.jpg

Tight quarters made for slow going so I removed the air silencer box to make more room (10mm nut-driver).
http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7868.jpg

Disconnect the camshaft sensor harness from the cable duct above the right cylinder head. (Just squeeze the wire clip. No screw driver necessary)
http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7869.jpg

The way the sensor wire was threaded made it difficult for me to remove the old part without removing the oil dip stick tube, so I just cut the wire.
http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7870.jpg

Install the new sensor using a new O ring! Lightly coat the O ring with engine oil. (While I was in there, I used electrical tape to seal the cracked portions of the protective sheath indicated by the yellow arrows.)
http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7871.jpg

Carefully route the wire along the path of the existing wiring and connect the camshaft sensor harness.
http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7872.jpg

I mentioned earlier that there was a potential problem with the positioning of this clamp. Even though the Bentley manual shows this clamp in the position above (photo #5), it is dangerously close to the cooling fan blades......
http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7873.jpg

.......so I repositioned it. (The final orientation I settled on has the screw pushed back behind the hose you see above it in this picture.)
http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7874.jpg

Reinstall the air filter housing and MAF sensor in the reverse order of the removal.
Next, plug your scan tool into the OBD port and clear the fault codes.
http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7876.jpg

http://i13.photobucket.com/albums/a282/jamesdc4/IMG_7875.jpg

Double check to be make sure you have reconnected all hoses, bolts and clamps. Check for any loose wires and gently rotate the cooling fan blades manually to check clearance.
Start the engine and go for a test drive, then recheck later for fault codes.

I hope this DIY helps those of you that decide to take on this project yourself and save some $s on labor.

There is another DIY on this project here:

http://www.bmwtips.com/
#23 on "Engine Trans & Exhaust"

Thanks for the info alot of stuff i need to do to the car just been lazy and i really dont wantto pay dealer price for ez fix, thanks one more time for the info

Thanks for a great post.

Word to the wise - if you buy the sensor from Bavarian Auto MAKE SURE to take out the stupid rubber rectangular washer that is on the side that plugs in (not he sensor side)....3 wasted hours trying to figure out why the hell it wouldn't fit. Major dremel action as well just to find the dumbass washer in the bottom of it. Took it out and it snapped right in...

thanks for the awesome write up! my sensor should be here in a week or so, now iu have some good instructions to follows since i have no bentley manual.