If you are loosing fluid, you have a leak. Commonly E39's leak directly under the fluid reservoir (low pressure lines), look to see if you have wet lines under your reservoir. What happens is that over time the rubber of the lines shrink, since the OE hose clamps can not be tightened, you'll need to cut them off and replace with adjustable clamps from the local hardware store. If you remove the mounting screw of the resevoir, you can cut the old clamps off and install the new ones without disconnecting the lines (open up the new clamps, wrap around line, tighten up) without making a mess.
My standard PS fluid thoughts:
Power Steering Fluid
PS fluid is just like any other fluid and it breaks down and gets contaminated with time and needs to be changed as a preventative measure, unless you think that its a "Super Fluid" and impervious to the elements like no other fluid that I know of. I can not believe that auto manufacturers continue to ignore this fluid in their list of regularly scheduled maintenance, maybe they like being paid to replace PS racks and pumps? I know that bearing clearances inside modern PS pumps are incredibly tight (a particle of anything in the right place could burn it up) - plenty of reason to keep new clean fluid in there. Although, I'm sure the reason that it's not part of the normal OEM maintenance schedule is the likelihood of sloppy mechanics introducing some contaminants into the system, or starting the car with no/low PS fluid, etc... So, the big picture risk of having issues is probably much lower if they just say to leave it alone. So if you choose to do this service take extra precautions and make sure that everything is clean (like you would for a transmission fluid service).
If you are starting with a new car, when performing an oil change service (every 5000 with synthetic) draw the fluid out of the PS reservoir and replenish it with new PS Fluid. By continually doing this you should have clean PS fluid forever and probably will never have to flush the system in this car because this service was started very early on the car.
If this hasn't been done on your car since day one, you might want to do what I did with my car. I changed the PS fluid in it by drawing the fluid out of the reservoir with a simple turkey baster and replacing it with new fluid (synthetic ATF for this car). I did this once a day for about a week when I got home from work, and used about a quart and a half of new fluid total. You could do this all in one day if you wanted to, the key is to exercise the power steering in between draining the reservoir, and I was in no rush. I figure that I changed about 95% of the fluid this way, and it still looks ruby red. Also when performing an oil change service (again every 5000 with synthetic) I draw the fluid out of the PS reservoir and replenish with new ATF, the old ATF gets added to the waste engine oil and recycled. By doing this I hope to have ruby red PS fluid forever and probably will not have flush the system again.
E39 - 1998 540iA Sport (11/97 Production)
E30 - 1989 M3 (44k miles)
1979 Triumph TR7, still have my first car ;-)
E21 - 1980 320i (sold at 130k)
E23 - 1986 735i
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