I have a RHD E34 so my switches may be in swapped places compared to your LHD one, but it might be the headlight adjustment thumbwheel that you're talking about.

On my E34 (1995 model), I don't have any blanking plates / covers, on my left where my fog light switch is, is the headlight adjustment, and on the right side where my parking light switch is, is internal dashboard illumination level wheel.

I have seen on some interior shots of E34s on this board this switch cover has a red LED, I'm guessing for some sort of alarm system.

Hope this helps you.