The ABS system is a closed-loop system comprised off an ECU, four sensors and a pump. By measuring the speed of each wheel, the ABS can detect when any one likely to lock up under braking. It then "pulses" the ABS pump, which is directly connected to the brake master cylinder, to apply the brakes in "ripples" rather than a constant force. This allows the wheels to maintain their turning, thus preserving a modicum of steering ability in times of danger.
The ABS works by reading pulses from toothed "rings" that slot around each front and rear wheel hub. For this reason, ABS wheel hubs are different to standard wheel hubs.
The condition of the ABS system is shown by a warning light in the instrument cluster. With ABS fitted, the light should turn on with the ignition, but switch off soon after. A light that refuses to turn off is a sign of a problem.
Each wheel has its own sensor, to detect the speed of the axle. These sensors are magnetic, and detect the pulses of the toothed wheel fitted around each wheel hub.
Since the sensors are magnetic, they attract all kinds of crap which can make the ABS behave erratically. If you think your sensors are playing up, you can do a basic resistance check on them to confirm their operation.
To check is the resistance of the sensors, unplug the white connectors just before the wire goes through the front wheel arches and check the resistance is about 1 kilo ohm with a multimeter. The rear ones are under the back seat. (pain to get to in a Touring)
The ABS pump, which is responsible for pulsing the pressure in the braking system when required, is located in the engine bay behind the LH headlight. It is directly connected to the ABS ECU, and has plumbing to the brake master cylinder so that it can control the brake fluid pressure. They are considered very reliable units, but at over 20 years old, any component can fail...
Power feed for the ABS system is a red/white or red/yellow wire from the main DME relay through pin 20 of the C101 connector which then splits to the ABS ECU and the ABS pump. Interupting this feed will kill the ABS
Flickering ABS Light
A light which goes off when it should but comes back on when the car is in motion is usually suffering from dirty rings. Unrelated to last night's curry, this is when the toothed axle rings that the sensors read get clogged with mud and grease. While it's a simple problem to fix, it's a pain working out which wheel and which ring has got clogged up.
If cleaning the rings doesn't help, the next step will be a damaged or failing sensor. Check that the sensor plug and sockets are not corroded. If a visual inspection doesn't show up the issue, then check the sensor outputs with an AC millivoltmeter, or better, an oscilliscope. Connect your meter to one sensor and drive at a fixed speed (i.e. 20mph). At the same road speed, you should get similar signals from each sensor. If any sensor gives a completely different reading, replace it.
ABS Light Stays On
This indicates a fault with the ABS. Unfortunately, there's no more info than that, so we have to ascertain whether the system is refusing to function, or that this is just a faulty sensor.
To diagnose, find a quiet straight road away from any traffic or lights, and do an emergency stop from a speed of at least 20mph. Check that you get the juddery pedal feel that signifies the ABS is in operation.
If you do, then go through the checks of a flickering ABS light. If you don't, start investigating the subsequent parts of the ABS. The relay is the next easiest component to check. It sits above the glovebox with the ABS ECU. If you remove it and open it, you will see that it contains a small length of wire like old fuse wire (which is what it is). If that wire is broken, then replace the relay . You can also search for corrosion of the ABS plug inside the engine bay; rust here will send faulty signals to the ABS ECU.
Unfortunately, if the sensors, loom and relay all prove fine, the only remaining parts are the pump and the ECU. Since neither of these parts can be tested with domestic equipment, the most obvious (and expensive) solution is to replace them.