I've seen a lot of posts on various forums whilst browsing regarding the factory fitted option alarm on early Z3's - the 3G EWS (the one with the large house brick key with red and grey buttons). I think most of the issues are because the supplemental instruction booklet that BMW provided with the install is next to useless... I've come across the attached document which should help answer most of (if not all the common queries associated with this alarm)
HTH
1998 BMW Z3 2.8 Roadster 1998 BMW 316i Compact (E36)