407 HDI 2 litre - Water in Diesel dash warning light

Car will not start and run., and has just suddenly happened, stopped the car one day and it would not start the next.
The starter motor turns so I assume it is not caused by the imobiliser cutting the fuel supply.
When I try to start the car it partially fires but will not run, and black smoke is coming from exhaust.
The warning light for "water in diesel" on the dash illuminates when trying to start the car.
I have removed the fuel filter/water trap, drained the filter housing (no signs of water) re-fitted the filter and primed fuel to top of filter cover, but warning light is still on.
Any thoughts on what the problem may be??
Anyone know where the sensor is located that gives the signal to the dash fuel/water warning light.
Any help would be appreciated
rgds Jim

 

Hi JimC, did you ever work out the issue?

 

The original problem was oil transfer to the water via the water/oil intercooler, and the unit was replaced by a dealer. When it happened again about a year later, the same dealer said it was not the intercooler, and "probably" the head gasket.At the time I parked the car and left it as there are not too many reliable Peugeot dealers in South Africa.
I then decided to try some "Blue Devil" head gasket sealant about six months age and this seems to be working, with no signs of oil in the coolant header tank.
I am retired now, and don't use the car too often, so am holding thumbs that the fix will hold.