ac fan works only on the forth degree..why

This sounds like a blower resistor to me as well. The 4th, highest setting bypasses the control resistor and that is why it works. I found a web page that explains how to replace it if you're up to it. hope this helps http://www.bmwe34.net/E34main/Maintenance/Electrical/Sword.htm

usually located under dash behind the cabin temp cluster after or part of fan controll switch.