I haven't looked at the wiring diagram, but BMW has long used the neutral switch to prevent starting the bike in gear. There is also an interlock with the clutch lever, so you can start in gear so long as the clutch lever is pulled.
A friend bought an R65LS about 5 years ago, and when we started poking at it, we found a neutral switch in the tool tray. When I removed the tank (to look at something else), I found a couple globs of electrical tape. I traced the wires on one side back to the clutch lever.
Sure enough, the clutch switch was dead. When I unwrapped the other glob, I found that the little connector had been jumped, so the interlock was always disabled, and you could start the bike in gear, without benefit of the clutch lever. But the neutral light worked correctly. I tested the switch and found that it was dead.
I figure that the neutral switch had died, but the PO continued to ride the bike using the clutch lever to start it, because replacing the neutral switch is a pain to do. (There was a LOT of other "deferred maintenance" on this bike.) Eventually, the clutch switch gave out, and he just jumped it at this convenient connector. At some point the bike went into the shop and they put in a new neutral switch, but they didn't know or notice the electrical tape globs, so it was still jumped.
At least, that was what I read from it. The parts of the puzzle didn't make sense to me any other way.