I have a 1994 E34 518. I have replaced the heater control panel with the left and right heater switches. My heater is on hot all the time. The fan controls as it should.
I assume you replaced the control panel in an attempt to fix this, not that it was working before you replaced the panel and now it isn't...
Check the heater valve near the top on the left hand side of the firewall. It consists of two solenoid-driven valves, one for each side of the heater matrix. It tends to seize in the open position, causing hot coolant to be delivered continously to the heater matrix. Operate the valves with a 12volt supply and they should make a solid clunk as they open and close. If it's a soft click or nothing at all, they're seized. Sometimes a sharp thwack with a tool will free them.
1997 535i V8
5spd, OBC, A/C, cruise, BMW phone, factory M-Tech wheel & suspension, 18" Alpinas