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Find the twenty pin connector located under your hood in the engine bay, normally near the right side firewall area. unscrew it and see the center plastic alignment pin, it looks like Pac Man. note where his mouth is facing, it looks like he is going to eat two pins, with your key in the on position, grab a peace of jumper wire and ground out the pin furthest away from the PAC mans out. ground it out on a nut on the shock tower for about 10 seconds, then remove wire and inspect lights, they should be all green.

http://www.YouTube.com/watch?v=2zdzsE3Wpz0 ....this is a video that shows you how to do it...VERY EASY

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Q: How do you reset oil service light on e36 BMW manually?
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