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Hey Guys,
Just wanted to chime in for anyone else in the future that might end up here. Good fix here, please read. I was having issues (2004 325iT) with my driver's side headlight stuck in the down position. Both headlights were functioning and the passenger side was leveling. I went through the following before I decided to open up the headlight unit:

-manual adjustment screws as mentioned above
-new battery (although both lights were lit and functioning)
-connections (MAKE SURE LIGHTS ARE OFF or even disconnect battery if you want, note voltage warning)
-auto leveling sensor arms attached to passenger side suspension, front and rear
-servo motor and connection on the inside of the headlight unit. This can be seen by popping the HID bulb unit cap off and peaking inside. Sometimes the arm with dislodge or that plastic piece will break.

all checked out and I was losing my mind. Upon noticing that the unit itself had a bit more play if you gave it a wiggle, compared to the passenger side, I decided it was time to go in. I followed a step by step headlight removal video from FCP. Fantastic.

Removal video:

Once I had the headlight out I started taking her apart to get inside. Fairly simple, just take your time. With the lens off I noticed that the high/low had become disconnected from the manual adjustment arm in the upper right corner. This was forcing the light to sit forward and down. Pics attached. In regards to checking the manual adjustments as noted above, even dislodged it may seem as if the adjustment screw is sort of working because it is still making contact with the headlight piece. Just depends on whether or not you are adjusted far enough. Alas, I adjusted both manual screws little by little to move the unit forward and then reseated the plastic pieces back together. Fixed.

Note: When you are putting the headlight back in there is an insert section to the bottom left that slides in underneath that very difficult screw. This has to go on right and seat properly for the entire unit to sit right.
 

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