From an Old Bimmerforums post:
3G Mk2 – This Thatcham Cat 1 system came in when the E36 was facelifted in 1996 and uses a rolling code. I've not seen it used on an E34 but I'm happy to be corrected. The two button (grey & red) "missing corner" fobs can be easily user reprogrammed (see below).
Fobs turn up regularly on eBay for around £10 to £15, but be cautious as there are two identical types, one of which is not compatible, see here...
https://www.bimmerforums.co.uk/forum/...ight=conundrum Replacement cases can be bought for £10 upwards.
The volume and number of beeps the system makes when setting & unsetting can only be programmed by a dealer or Sigma specialist.
If your fob doesn’t work check the battery first. If the LED on the fob flashes instead of being constant then the battery is on the way out. When you replace the battery clean the contacts as they get coated in a “varnish” of dried sweat and dust. The battery should be inserted positive to left, negative to right. If the battery is good and the fob LED lights up but still does nothing then it probably needs reprogramming by following these instructions (I’ll assume you have located the alarm module already)
1) Prise out the rubber bung from the remote receiver.
2) Insert a thin screwdriver into the hole and flick the coding switch to the right to set the remote receiver into “program” mode.
3) Press the red button once on each remote (max 4 remotes).
4) Flick the coding switch back to the left and replace the rubber bung.Your fobs should now work.
If there still seems to be a problem prise the remote receiver off the control unit to reset it. When you replace it (be careful you don’t bend the pins) the central locking should close & open. Re-code your fob as in steps 1 to 4.
If this doesn't work fully unplug the module, wait a minute, then reconnect it and Re-code your fob as in steps 1 to 4.
Still no joy? Prise the remote receiver off, short pins 1 & 6, then pins 1 & 8, reconnect the receiver, then Re-code your fob as in steps 1 to 4.
Finally, if all else fails prise the remote receiver off, short all the pins in the module, then Re-code your fob as in steps 1 to 4.
If that doesn't work then you need a new receiver.
User Guide (1995) is here...
https://s447.photobucket.com/user/billy ... 995?page=1
User Guide (1998) is here...
https://s447.photobucket.com/user/billy ... 998?page=1
There also appears to be an early version of this system that has the Mk2 fobs but the remote receiver doesn't have a coding switch. If you dismantle the module you should find an orange wire. Grounding this wire to earth seems to have the same effect as flicking the coding switch, after which you follow the coding instructions as above.