my 190 e which has a 1.8 litre engine used to run hot in traffic and at idling,the temp gauge would creep up to 120 degees on the temperature gauge.--my engine has an electro-magnetic clutch type fan which is supposed to cut in at 95 degrees if working properly-i replaced the cooling fan switch which is on the cylinder head and this has solved the problem and normal gauge behaviour has returned.

do the 560 engines have an electromagnetic type auxiliary cooling fan-if so irt would be worth checking the cooling fan switch out.

the only other time i have seen a bmw 525 overheat like yours is when the t-stat snapped shut and another time an audi ,5cylinder ,in which the radiator core was blocked-changing the radiator cured it.the odd thing was the radiator appeared totally normal from the outside but the inner tubes were blocked.
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