Well, we're still using $$ for the time being, I imagine some time soon we'll have to make the change over to the Euro or the yuan...
Anyway, before that happens, if the hose looks okay, then I'd suspect a broken or cracked connection, perhaps even in the radiator itself. But these are just conjectures, so certainly do that close inspection under the hood (bonnet?). I'm not sure that an automotive thermostat can be adequately tested using boiling tap water, don't forget that one purpose of coolant is to allow for an increase in boiling temperature. In any event, if you've gone to the trouble of removing it, you may as well just replace it with a new one.
Flushing a cooling system means draining the fluid from the radiator (usually a petcock at the bottom of the radiator) as well as opening up the drain plug on the engine block. I don't know where this is located on your engine, so a little research is in order (and it can be a pain to get to, and to undo). Procedures can vary a bit, in some cases putting in a mixture of demineralizer with distilled water is a good idea to provide a second flush. I think BMW advises using solutions that have no phosphates, borates, or silicates in them (or some such compounds), but I think the modern, reputable products on the market all avoid them. The 50/50 premix products are very convenient to use, just use directly, no need to do the mixing yourself. Obviously you can go to a BMW dealer and get their product, but at two to three times the cost of major comparable brands you can get elsewhere.
Do some online searching and you should come up with procedures and helpful hints to make the job go smoothly, withou spilling too much of the stuff around.