Oxygen Sensor
The Lambda (O2) sensor is by far the most common fault that brings up the engine fault light.
Update
Since the fuel contamination problems in early March 2007, a few people have found their car to be sluggish, the engine light illuminating or the car fails to run.
If you have an X-Gauge you can check the error code, if it comes up as:
P0130
P0131
P0132
P0133
P0134
It shows the lambda sensor in the turbo is faulty. (upstream).
If the code is displayed as:
P0136
P0137
P0138
P0139
P0140
It means the lambda sensor in the exhaust is faulty. (downstream).
P stands for Powertrain, this tells us it is an engine fault.
0 informs us that it is a generic code and not a manufacturer specific one.
1 tells us the system that is faulty, in this case 'Emission Management (Fuel or Air)'
The last 2 digits relate to a particular part and problem.
In most cases, it will be the upstream sensor that will suffer.
Locate the pair of lambda sensors, both circled in red.
Ideally you need to wait until all the areas are cold and before attempting removal, both sensors should be treated with some penetrating oil like Plus-gas or WD40.
Follow the wiring for each sensor and it will lead you to a plug, this connection pulls out.
Using a 22mm ring spanner is a much better way to remove the sensors as they have a greater hold all the way around. A standard spanner can work but can slip and damage the sensor and the surrounding area. Ring spanners have another advantage that they have a smaller outside diameter and a cranked head.
So, thread the ring spanner onto the sensor and undo in an anticlockwise direction.
It probably won't come out easily but you can persuade the other end of the spanner with a rubber mallet to break the seal and get it going.
Replace Or Repair?
If your sensor has just failed, it will probably just need replacing but not always.
The opposite infact if you have used contaminated fuel, there is no reason the sensor cannot be repaired by yourself.
Replace
Don't go to smart. You will get charged a lot for one, if they have one. Your best bet of getting a good deal is contact a local motorfactors (look in the yellow pages for your nearest one). The sensor is a standard Bosch part and the same for both sensors.
Alternatively you can buy an upgrade sensor from Smartarse Design, place that in the exhaust and use the exhaust one in the turbo.
Repair
Obviously not being touted by garages as they obviously want your money for a replacement. Although the petrol manufacturer hasn't declared what the petrol was contaminated with, it is obviously coating the sensor so they stop working.
The is no reason that this coating cannot be cleaned off to allow the sensor to work again, you can try petrol, brake cleaner or another type of solvent. The worse that can happen is it still won't work but surely it's worth a try.
Refitting
It is a good idea to lightly copper grease the thread of the sensor before it is replaced, it will allow an easier removal next time. When you tighten the sensor with the 22mm ring spanner, you don't need to swing on it, nipped up tight is perfectly fine.
With the sensor in place, reconnect the wiring plugs and disconnect the battery for 10 minutes. Doing this will clear the light on the dash. Reconnect and try the car.
It will take about 50 miles for the ECU to build up a voltage table before it decides whether the lambda sensor is OK or not. If the light comes on again, the sensor needs changing.