Okay, here we go. . . hope this explains it clearly enough.
on E36's, 2 things that can cause the OBC warning are the harness or the sensor itself. The easiest is the harness: just untab and pull it out, clean the contacts, and plug it back in. 95% of the time, this is the culprit.
If that doesn't clear up the warning, then it's probably the sensor itself. It's nothing more than a float, not unlike the float in your toilet tank that stops the water when it's full. Except in this case, the level of the float determines the resistance in the electrical circuit of the sensor. This float is like a round cylindrical donut that goes up and down a shaft. If it's not sliding up and down freely, then it gets stuck, triggering the OBC warning. Which means you have to pull out the sensor and clean the debris off the unit- by running it under water and rinsing the crap off. If that doesn't cure the problem, then the sensor is bad. But most of the time it just gets stuck. Problem is, you have to remove the coolant expansion tank to get to the sensor and unscrew it from the bottom. Which means you're gonna lose some coolant, and you'll have to bleed the cooling system afterwards.
I do this procedure every spring, when I flush and refill the cooling system. I've had the same sensor as when I bought the car, and have had no trouble fixing it if/when the OBC warning does come up.