You point to a wire that appears to be plugged in and ask, "what's it for?" and describe a symptom that is caused by the wire that's not plugged in yet has a note pointing to it, "you do not need this."
The antenna wire is the one that's not connected, at least on my E36 the antenna connection on the back of the radio looks _exactly_ like the one on the wire that's hanging.
I'm not sure how you want the antenna signal to get from the antenna to the radio without all of the wires plugged in. You need power to the antenna amplifier, and you need the antenna to go into the amplifier on one side and come out again on the other and continue to the back of the radio.