That is, indeed, the connector for the ambient temperature sensor. If you had looked inside the "plastic square pipe" at any point, you would have seen a small finger of metal sticking through the inner wall of the pipe; that was the sensor. Your sensor is laying on the 5, crying to you, hoping someone comes along and rescues it.
<img src='http://www.tinsmithtech.com/graphics/sigpic.JPG' border='0' alt='user posted image' />
Dad's 1992 325iC