I strongly believe the device to which you are referring is the "brake pressure accumulator". I have a book called "BMW Enthusiasts Companion," which is a collection of Roundel (BMWCCA) articles over the years. I recalled an article in there by Rob Siegel when I read you post, and I've looked it up.
"The 533i [and all other BMW's with the big six--3.3L and 3.5L] utilizes hydraulic assist: power steering fluid is used to generate hydraulic pressure which is stored in a bottle officially called the "accumulator," and colloquially called the "brake bomb." The bomb is hanging upside down from the power flow regulator, a small device with four hydraulic lines and two pressure-activated electric switches screwed into it. The accumulated and regulated pressure is used to draw back the brake master cylinder when the pedal is depressed. The bomb is a practically normal wear-and-tear part, running about $70 through Roundel advertisers. When it starts to die, it doesn't hold pressure, and the required pedal effort suddenly increases..."
The leak described in his article came from the brake booster, not the brake bomb. However, I love this book and recommend everybody to buy it. The article described is on page 140.
Anyway, it seems your problem may stem from the so-called "brake bomb". Doesn't sound like it's too expensive or complicated to fix.