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The plug in your hand is the diagnostic port that BMW would plug into a reader/control box, member Pat Allen makes a replica box. That plug should go in that bracket by your hand that your first picture shows the cover for that plug. You can splice the wires back together or cap them, your choice they have nothing to do with anything other than hooking up the box, but some of them are live and could short if grounded. 

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Put a grommet to a wire bundle that goes to wiper motor. Test socket has hadsome robbing before? Not vital but al least cover those end for shorting. Find schematics and you’ll be able to see what comes from where if you want to replace wiring to test socket.

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The blue wire and the black wire with the red 10 amp fuse are not original. I would trace them to figure out what they go to, and then replace or remove them as necessary.

 

I also see a few crimp connectors and some electrical tape that I would atleast replace with newer weatherproof connectors or solder and heat shrink.

 

Check out the wiring diagram in the articles section.

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Thanks for your replies. Eventually, I'd like to really clean up the engine bay and all the wiring (among other things). I went to the 2002 gathering in Los Gatos last weekend and some of those 2002s were in such good shape and the engine bays were just immaculate. I'm hoping someday mine will look (and sound and drive) half as good as they do. 

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