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My 1998 BMW Z3 is having the same problem and now the ignition seems to be locked and the key won't turn. The car died when I let the clutch out. The car now seems to be stuck in aux. mode. The key is out but the dash lights remain on and you can use all of the electronic options. Did you ever figure out what was wrong?

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Q: Why won't' my 1998 BMW Z3 stop running when I turn the key off?
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