Faulty oil level sensor Q's

Yes need to drain oil to replace the sensor, you will have to drop the under tray to get at it.
Parts diagram and part numbers here https://www.realoem.com/bmw/enUS/showparts?id=BT52-EUR-06-2004-E85-BMW-Z4_30i&diagId=11_2187
Various brands available here go for a known maker prices vary
https://www.onlinecarparts.co.uk/oenumber/12617508003.html
Also available via ebay various makes and prices
https://www.ebay.co.uk/c/645199485
 
My sensor hasn’t worked for the past 2 years and tbh, it’s no big deal. Just check level every week or after a spirited drive.
Can’t imagine changing anytime soon as I suck oil out on changes with a pela pump.
 
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