Closed loop means that the computer changes the mixture based on signals from the O2 sensor.

-When is it helpful to disconnect the power to reset the computer?
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The Motronic on your car is not adaptive, so disconnecting and reconnecting it should not change anything. Later series Motronics are adaptive.

-Is there any advantage to keeping the O2 sensor connected besides legality and emissions? My 6 seems to idle nicer without it, but less predictable performance. Does the O2 keep engine operating more consistently?
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The O2 sensor SHOULD keep the engine operating closer to the "ideal" mixture, but usually, most engines run a bit better a tad richer for all functions except steady state cruising at constant output. The computer (closed loop) tends to try to lean out the idle too much on these engines, and definately leans the mixture out on acceleration, which often causes "lean surging" on acceleration (feels like car is being accelerated via a rubber band that gives uneven, rhythmic acceleration).

-Apprecitate any other info. You're knowledge of the intricacies of the most mysterious workings of the 6 motor is most impressive.

Thanks; whatever I know I stole from other sources or learned after great frustration! There are some great books out there just on Bosch fuel injection. $75 well spent!

bob