The 520i doesnt always have the same level as spec as the 525i so there may be a simple answer - your 1995 520i doesnt have an oil level switch. This is for a 12/94 build euro 520i manual and it doesnt have one. It just has the cap and 'o' ring that blocks the hole where the switch would go.
RealOEM.com * BMW E34 520i OIL PAN/OIL LEVEL INDICATOR
The service indicator can be reset. So can the oil service indicator which is a row of green bars which reduce in number with mileage. Have you got one green bar left and are you reading that as a quart - or does it actually say it in check control? Wouldnt mind a pic if it is the latter as that seems pretty smart to me
Oct '00 E46 330i. Feb '92 525i (departed)