I have Cooper S 2009.

1. Do I have to replace the sensor once I replace the front brakes?
2. How do I know if I need to replace just the pads or the rotor as well? (In Mini dealer they told me that I need to replace both pads and rotors)

 

The dealer will want to replace the sensor with one of their $50 replacements. If you haven't worn the sensor down to where the brake warning light comes on, you don't need to replace the sensor. Otherrwise, I got one on-line from a known auto parts retailer for $17

Used to be you could resurface rotors for use with a new set of pads, but nowadays, they are thin enough that you can do it to be cheap, but you risk warping them when heating up a thinner resurfaced rotor. Rotors are cheap. Get a pair from an on-line retailer like RockAuto. Get ceramic pads, too, they're BETTER than the cheap stuff the dealer will overcharge you for.

Unless the dealer is holding your children hostage, go find an independent Mini or BMW mechanic. They're more likely to give you the true story of the condition of your brakes, what's needed, and do it for a lot less with better components than your friendly dealer.