The key I bought was brand new, with the up arrow and trunk picture raised up on the key (no printed on). Also, this key did NOT appear to be glued together, rather is snaps apart and together, so there is no need to cut it open and glue it back together, it snaps shut! This is great if you ever need to replace the battery.
2. Get your key cut. I found a local locksmith who cut my key for $25. It took him about 5 minutes to cut and he tested it in the door and ignition to make sure that it worked. When I called and said I needed a BMW key cut, he asked what year and looked it up and said I had to go to the dealer because it needs programmed. I then stated that I only needed the actual metal key part cut and I would program it myself and he said he had the equipment and could do it. You may have to call a few places to find a locksmith who will cut your key.
3. Gather the necessary parts/tools to replace the transponder and battery. Here is a picture of what you may need and what I used. New diamond key, old square key, utility knife, vice grips, small pliers, small cutters, small screw driver (phillips) and a non-rechargeable battery. The vice grips and pliers won't be needed unless you have a diamond key that needs glued back together when you are finished.
4. Start with the old square key and remove the small cover on the back and remove the two small screws.
5. Remove the battery holder/circuit board from the key body by prying up on one end with a small screw driver.
This is what the back of the circuit board looks like
6. Locate and pop out the transponder chip. It is located in the corner of the square key shell (top right corner of my pictures). Mine was glued in so I popped it out with a small screw driver.
[img[http://luckysnafu.smugmug.com/photos/177643620-M.jpg[/img]
7. Place transponder aside for the moment and put your old key back together. Your old key will now no longer start your car. It will still have the remote function and the actual key part can unlock your door/trunk and turn your ignition on. It just will not start the car unless you put the transponder back in.
8. Take apart your new diamond key. Since my key was so new, it just snapped apart, there was no glue to cut through. I ended up taking my utility knife and placing it between the two halves of the key where the hole for your keychain is located. This will allow you to pop the two halves of the key apart.
Please note in this picture, the blade is NOT located where I described, it's just to illustrate what I did!
9. Here is what the inside of the diamond key looks like.
close up
10. Pop out the circuit board. It should just pop out if you put your fingernail in one end and pop it up or use a small screw driver. Be careful not to damage the board or the key shell.
rear side of circuit board once removed from shell
11. Remove the transponder from the circuit board. The transponder is actually located inside the copper coiled wire (bottom right side of my pictures). I removed this by using my small cutters and just snipping each end where it was attached to the circuit board. You may use any method you desire just be careful not to mess up the circuit board. It does not take much force to remove the transponder and copper wire since they are only held on by small amounts of solder.
12. Take your old transponder that you set aside earlier (from your old square key) and glue it to the diamond key's circuit board in the place of the transponder/copper coil that you just removed. I used some silicone glue to attach my transponder to the circuit board. Test fit your key before gluing to make sure the key will close with your transponder on the circuit board. If you put it in wrong your key may not close the whole way.
13. Replace the rechageable battery with a non-rechargeable battery. I used the radio shack version of the original battery from the square key (http://www.radioshack.com/product/index ... Id=2062103)
I am not going to go into detail since there are other DIY's out there that address how to do this, here are a couple that will help you out. I did not solder the contacts to my new battery, the pressure from the case is enough contact to make the key remote work. Feel free to solder them if you want to.
http://forum.e46fanatics.com/showthread.php?t=451510
http://forum.e46fanatics.com/showthread.php?t=481585
14. Put the key back together. Put the circuit board back in and then snap the case shut.
Admire your new diamond key
15. Program the key remote so that it unlocks your car. This procedure is all over the forums, do a search if you don't already have the info.
16. Enjoy your new diamond key and laugh at all those who said this was impossible
