I have had transmission temp light issues before. The first time the light went on I was on stockton beach. Pulled over and let the car cool down for good reason as the transmission pan was red hot 
.
Light wouldn't go away though, so next day I went searching and found that the wires to the transfer case sensor (which I still haven't been able to find
) were shorting out on the transfer case, taped them up and the light went away.
Apparently D1's temp warning light on the dash is triggered by the inline temperature switch for the automatic (on the cooler lines, just behind the front chassis cross member under the radiator can't miss it) and a transfer case temperature switch (which as I said I still haven't found).
If the temperature sensor is working properly (the one for the auto), then it will read as an open circuit when it's in the cool range (below 130 deg C, I think
). When it's in the hot range it will read as a short circuit and hence trigger the temp warning light on the dash. Easy enough to check whether it's the sensor or the wiring. Pull the wiring off the sensor and measure the resistance across the two connections on the sensor. If it reads close to zero and the car is cold then your sensor is rooted 
, time for a newy (about 75 bucks from memory). These sensors generally don't like being immersed in water or mud for too long, they tend to be a bit precious and failures are relatively common. If on the other hand the sensor measures like an open circuit (heaps of resistance) then it may be the wiring shorted somewhere. Measure the resistance between the two spade connectors that you just pulled off the auto sensor. If you get a short circuit (ie close to zero) then chances are you have a shorted out wire somewhere, time to start chasing the wiring out
.
Of course, with mine now I have a different issue as I've just replaced the standard auto cooler with a big ass P38a Range Rover cooler (3 times the size) and elected to get rid of the standard temp sensor when renewing the cooler lines from the gearbox to the cooler. Now I'm using the P38a sensor on the side of the cooler, but it doesn't seem to be working.....hhmmmm
.
Hope some of this is helpful.
Cheers
Goldey
Just arrived: 2012 D4 3.0 HSE, the journey begins again ;-).
Gone: 98 Disco 300tdi Auto, and some extras
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