I guess it's pretty odd that once you consider how many BMW's I have owned in the past few years, that I have never once owned any type of BMW specific diagnostic scanner. With the recent purchase of my '00 M5 that has an airbag/SRS light on-plus the fact that four other friends of mine own BMW's-I decided to see what would be the most cost effective solution that would work with all of our cars.
I know all about the Peake tools, but due to the fact that my friends and I have BMW's that run from 1988 up to 2004, we would have had to buy both Peake tools and the SRS reset tool-in the end, that wasn't cost effective. After some research, the Carsoft 6.5 compatible system seemed to do all we needed-works with all the BMW's we own, resets SRS/airbag lights, and does many other BMW specific functions such as coding, adaptation, etc.
Now I did not buy the geniune Carsoft system, but a compatible version from ebay. This seller sells his version for a few dollars more than the others, but offers better after the sale service in case you need it. Here is the link to the sellers auction: http://motors.search.ebay.com/_W0QQsassZtoolbox2661
I am not affiliated in any way with this seller, but there are a number of these out there and I just want to let others know which one is guaranteed to work with our M5's. You receive the hardware with both the underhood diagnostic port connector as well as the newer OBDII connector under the dash. It also includes a CD with installation and troubleshooting information, as well as the link to download the Carsoft 6.5 software. You will need a Windows based laptop with either a serial port, or a USB to serial adapter. I have many older Thinkpads lying around, so the ol trusty Thinkpad 600X I purchased off of ebay for $50 last year is doing the service.
So far, I have used the setup on my '00 M5 and '02 X5, and a friends '03 E46 M3. In every case, I was able to read all installed onboard modules and diagnostics and reset any error codes. Every error code has a short explanation telling what the fault is. Note that on my '00 M5, you must use the underhood diagnostic port for everything to work. On my '02 X5 and the '03 M3, the OBDII port under the dash worked fine.
The overall setup may be a bit more cumbersome than the smaller Peake Research tools, but you seem to be able to access much more information with this Carsoft compatible system. Plus, you don't have to spend the extra for the seperate Peake SRS reset tool-for $155, this has everything you need-as long as you already have your own Windows based laptop.
As stated before-no affiliation, just a very satisfied user passing along what will hopefully be some useful information.