Hi Seany, the problem here is a seized mixer valve. It is located up in the left hand side of the bulk head. You can remove it, take it to pieces & free it out but you'll need to bleed the cooling system. Here's an extract on the same thing I posted for an e36 recently:

The heater control units in the e36 & e34 are known to jam shut. It is mounted up on the bulkhead on the left hand side. Depending on whether your car has climate control or not it will either have 1 pipe in or 2 pipes out.
When the engine is up to temperature, preferably after a bit of a drive, check that the pipe coming out is actually getting hot. The pipe coming out is the one that goes in towards the cabin of the car. If its not warm (in act if both pipes are not warm) then the heater control valve unit could be faulty. Here's what it looks like:

 

Thanks Mark, will take a look

 

If yours doesn't have separate heater controls for left & right you'll only have one metal dome type thing & one out pipe.

 

You sure Sean it doesnt have like 2 cyclinders ???? Mine has 2 cyclinders joined together and 1 inlet and 2 outlet or maybe its 2inlets 1 outlet i am sure i have one lying about somewhere. Will take a pic if i find it.