On e32s there are two (at least) fuse boxes. One is in the engine bay, and the other as you said is under the rear seat. Check the one in the engine bay to see if any fuses or relays there my be related. If everything checks out that way, then it would be my quess that a wire is loose somehwere inbetween your switch, and the fuse box. Or between the fuse box and the window itself. I have the e32 repair manual (but not on me) so I'll check if it says anything about trouble shooting this problem.
Also, if you haven't done so already, post your question on bimmerforums.com ... they have a much larger 7-series section and many knowledgeable members.
Worst case scenario, you could always pick up a 12 volt space heater and put it in the back window. I know at least some e32s had a outlet in the back. Not a very graceful solution, but would be a lot cheaper then labour at BMW to diagnose the issue.
Last edited by Seven; 11-23-2006 at 12:37 PM.