Karel

This will not be a complete answer about your O2 Warning Lamp since I am working from memory only - But

The warning lamp is not "connected" to the sensor circuit. It was designed to provide a warning when the car went over its "initial" milage period (I can not remember what the milage was but it may have been 60,000)

The intent was so that the car would pass environmental laws. It was recognised that the O2 sensor had a life span and should be replaced. To satisfy the environmental legislation they put in a device that set off the O2 warning lamp, but only once (at whatever that milage point was)

This was accomplished by a small replaceable fuse in the back of the instrument cluster. When the odometer reached the "chosen" milage point it caused a short across this fuse that caused it to blow - the electrical result was that the O2 warning lamp lit. At that time the dealer normally replaced the sensor and removed the fuse unit - this way the lamp would never light again. ( I may be wrong on some of this detail - it has been 12 years since it happend and I no longer have the drawing showing the circuit )

BUT
My dealer simply tested the sensor and did not change it, saying that they last much longer.
In fact I never did change mine. I had the car 14 years and 280,000kms. Since it was easy to pull the sensor out all I ever did was use a wire brush and a fine toothed "pick" to keep the slots in the sensor open (they originally used to clog with exhause deposits but after Shell modified their gas in about 1988 (?) I never seemed to have many more deposits)
Throughout this time I had the sensor and CO levels tested occasionally

• - they were always within original limits.

If you do go into that back of the instrument cluter to remove the fuse, or replace it, it is located on the upper right (looking at the back of the cluster) behind the speedometer. It is a 0.1 amp fuse. The old diagram I have of the cluster says "unsnap cover, pull fuse to remove."

I am puzzled as to why your lamp came on at 160,000 miles. As I said it should have been at a much lower milage. The only thing I can think of was that someone reset the system (new fuse) and it has triggered again. That is what made me think the original milage should be 60,000 - maybe the circuit is triggering on the 6 in the 5th digit wheel. I think I remember looking at this once and realising it was a tiny sensor on the odometer wheels - can't remember the physical details.

Hope that helps.

Cheers

Jim Cash
London Ontario, Canada
E39 540ia