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We got the 5 speed out of the old wrecked 318i to swap it out in place of the 4 speed and I noticed there's a second switch on the box. I assume the two-pin one on the side (circled in yellow) is the reverse light switch. What's the three pin one on top?

Cheers

If your gearbox is a 245 5 speed the reverse switch is on top.. On 242,242/5,240 boxes the switch is on the back end ..the other switch i think has some thing to do with the timeing of the ignition in certain gears...
link ..
http://www.bmwe21.net/forum/viewtopic.php?f=3&t=1977

Dear old Dad found (via google I imagine) that the other one is a "neutral switch". as it's going to replace the old 240, 4 speed in the track car, I won't ne needing it.