As quoted per the 2003 release of the 320i/325i/325xi/330i/330xi manual
"The rain sensor is positioned on the windshield, directly behind the interior rearview mirror.
To activate the rain sensor:
->With the ignition key in position 1 or 2, move the lever to position 1. The wipers will make at least one sweep across the windshield. You can leave the lever in position 1 at all times. With the ignition key position in position 1 or higher, all you then need to do to activate the rain sensor is ..
-> Breifly turn the rotary dial 5, or
-> clean windshield 1, refer to page 69.
To adjust the sensitivity of the rain sensor: turn rotary dial 5.
To switch off the rain sensor:
Return level to position 0.
<Notice> Turn the rain sensor off in automatic car washes. Failure to do so could result in damage caused by undesired wiper action.<-"
To clarify positions. the lever alll the way down is labeld as 4. one up is 0, then sequentialy up one position is 1, 2, and 3 respectivly. dial 5 refers to the .. dial. you'll know what it is. also, by "cleaning the windshield" they mean use the washer fluid that sprays your windshield. =)
Hope that works for you.
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