e34 climate control blower problem

I have a 1988 535i e34, the fan blower of the climate control only work when turned to its maximum and I got maximum fan speed. Lower speed and I have no fan. Taken the control panel out and measured the potentiometer of the control knob and it seems OK? Before the control dies, some smoke was emitted from the vent, so I suspect something had gone wrong in the air induction or inside the blower housing. Much appreciate any suggestion as to what had gone wrong. (Is there a resistor pack with the climate control and where is it located)
Thanks a million, as the fan is driving me crazy.
Sanga

check this out:
http://www.bmwe34.net/e34main/mainte...ical/sword.htm