Pads (front) sound glazed and fluid was probably boiled. Bleed it right away, and if the pads have a smooth shiny surface, either get them cut down, or replace them (replace is easier and probably good insurance). Do the rotors have an uneven color on them, or do you see any "smeared" on the surface? Does your pedal ever pulsate when you apply the brakes?
As for the brake light, I'll let someone not as new to BMWs surmise what that means. I'd just be guessing.