Hi Dan,

Sounds very much like your dim/dip resistor is kaput. See an earlier
thread about this (it's a common problem).

The dim/dip resistor allows extra light from the headlights when the
sidelights are on (it allows approx 1/6 of the normal brightness).
Unfortunately, often a corroded contact or frayed wire will cause too much
current to flow to the resistor and over time will cause damage which will
lead to it blowing.

There are two things that you can do:

1) Contact yoru local Peugeot dealer and ask them to source a new dim-dip
resistor. You can ask a nice mechanic to show you where it is located in
your car (in my 306 it is under the bonnet on the left hand (passesnger)
side attached to the chasis next to the fuse box (you need to remove the
fuse box cover to get to it. You see it as a metallic cylinder about three
inches long and about one inch in diameter). It's very easy to pop the old
one out and put the new one in.

2) Remove the resistor from the equation by cutting the three wires to it
and wiring up two of them together which effectively bypasses the
resistor. You can check out your Haynes manial for the wiring diagram or
take it to your local, no nonsense garage who will do it for you cheaply.
The dim/dip function is not a legal requirement (although the Haynes
manual says that it is) check out:

http://www.topgear.com/content/features/stories/faq/01/modules/05_electrical_sec
urity/08/

Regards,

Wayne