ask here, there are the E32 experts
http://www.bimmerboard.com/forums/e32/
Get another hose. They are pressure hoses, not only simple hoses
http://www.realoem.com/bmw/diagrams/n/s/2.png
At the dealer they are pretty expensive, what you could try to find a hydraulic repair shop which also repairs hydraulic hoses for earth shovels and construction machinery. They grind off the sleeve which holds the rubber into the metal pipe and insert a new high pressure hydraulic hosse and a new crimp sleeve and that is pressed in a big crimp press.
The gringding noise comes from the power steering pump because of the leak, as you do not have enough power steering fluid in the container. Refill the fluid reservoir with the proper stuff.
The check control is probably to be seen in connection with that leak, as the power steering has some problems.