It is the FUEL SENDING UNIT- TRUST ME ON THIS- I DID A TREMENDOUS AMOUNT OF RESEARCH AND SPOKE TO EVERYONE "IN THE KNOW". I have owned four BMW's, both my 95 325is and my 98 Z3 had this problem. AS you may have read, my 98 Z3 had this problem SEVEN times- they have since replaced my car. I have spoken with BMW U.S. and the regional office. Both have informed me that the problem is with a defective fuel sending unit; that it is a repeat problem; and that it is affecting a large amount of U.S. Z3's. They also told me they are working hard on a fix. The problem is caused by erosion to the connections in the fuel sending unit; a problem unique to the american market and caused, in part, by the poor quality of our gasoline.