2004 325i: Transmission warning lamp ALWAYS ON - what to do now??

[ssmbmw]

The transmission warning lamp on my 2004 325i E46 lit up this afternoon while driving in normal city traffic. It forced the car to go into 'limp' mode. There are no unusual sounds from the transmission though.

This started to happen a few days ago when I start the engine in the morning. The transmission warning lights up before I start the engine. But I turn it off and on again then it goes away.

But now it's always on. Have already driven it back home 10 miles with no problem except of course for the forced-on-one-gear 'limp' ride.

I googled the problem and saw a thread that says it's sometimes an electrical connection problem, since some say the warning lamp goes first when the system is under-voltage.

Battery is new (12.6V engine off) and alternator seems to be fine (14.1V engine running). Already tried disconnecting the battery for 15 min but it still didn't solve it.

Is this a simple sensor failure replacement issue or is there a much deeper cause?

PLEASE HELP!