3 YEAR UPDATE:
Well, it's been almost 3 years since I bought this car (next week) and I can't believe I haven't updated this thread since then. The car has been pretty trouble free for the most part and I now stand at 166,700 miles with it being just over 16 years old this past November. There have been some minor-major issues but nothing out of the ordinary with any
E39:
-New ABS Control Module
-New Brake Master Cylinder
-New Alternator & Battery
-New HVAC Control Panel
-DISA Valve Replacement
-CCV Replacement
-One New O2 Sensor
Other than that though, it hasn't really needed anything else.
Since this is an update of sorts, there is one thing I had to yesterday:
TUNE UP (I know, why wasn't this one of the first things I did?)
I lost a Coil Pack a few weeks back at the most inappropriate time (but then when is it not?) while my wife and I were driving back to our hotel in Desert Hot Springs after being in Joshua Tree National Park all day. This was a Saturday night around 4:30pm so finding a repair shop or even the BMW dealer in Palm Springs open at that hour was not happening. We flat-bedded the car back to the hotel and low behold the car started and ran apparently fine. It was intermittent so we were able to drive back Los Angeles the next morning, but it was sketchy. After some back and forth with me and my mechanic's AutoLogic computer we pegged it down to Cylinder #1 and I bought a Coil Pack off him and have been limping around all week waiting for a complete tune-up package (Coil Packs, Resistor Boots, and new Plugs). I opted for the new NGK's in lieu of the Bosch Platinums I took out.
First, remove the plastic cover to reveal the Coil Packs:
[Note: you can see the obviously new Coil Pack on Cylinder #3. This was part of our experimentation to determine the bad Coil Pack. We swapped #1 for #3 and ran a scan. I installed the new replacement Coil for the bad one which happened to be in the #3 spot.]
Then you need to remove the Cabin Air Intake Boot in order to get access to the back two Cylinders (#5 & #6); careful not to break those plastic tabs:
I opted to do one complete removal and installation per cylinder versus removing everything first and install it all en masse. Disconnect the electrical plug by prying up the locking clip:
Then unbolt the two 10mm hex bolts that hold each Coil Pack onto the Cylinder Head and secure the Resistor Boot onto the Spark Plugs:
After that they just pull off the Spark Plugs and you can remove the entire assembly. Except for the two Cylinders that had oil sitting in the wells, each of the old Boots looked like this, showing the carbon build-up over the last 50K miles:
The car hasn't had new plugs since March 2011 (about 50K miles ago), so the plugs were kind of due for a change. Both the Coil Packs and Boots were original as far as I could tell, so after 166K miles they were pretty much at the end of their service life as well. As you can see, they were definitely worn:
Cylinder #'s 2 & 4 were the worst as they had standing oil for the leaking Valve Cover Gasket (hopefully). The oil was certainly sludgy and old so I assume this stuff has been sitting in the cylinder wells for some time. But according to the PO's records, both the plugs and gasket were replaced at the same time so I would assume this amount of oil would have had to be cleaned up. The other plugs had some evidence of oil on the threads, but nothing too bad. This is concerning as I know the car burns some oil (well, I'm losing oil due to leaks and burning I presume) at about a quart every month or two. Something I will have to monitor for sure.
Cylinder #2:

Cylinder #4:
Installation of the new NGK Spark Plugs ensued, liberal amounts of Anti-Seize on the threads and tightened accordingly to spec. The old Plugs were not as they should have been: Cylinders #1-3 were pretty loose and #’s 5 & 6 were over-tightened.
After that, it was assemble the new Coil Pack and Resistor Boot and install:
Put it all back together and fire it up. It was kind of rough for the first 10-15 seconds but then it evened itself out. She purred like a kitten after that. Test drive revealed an almost new car; it didn’t stumble on acceleration off stop signs, it shifted smoothly and I got all my low end torque back. All in all a happy M54 once again.
My wife and I just took the car out to my sister's house for Christmas Dinner (+/-45 miles round trip via freeway) and it was marvelous; truly felt like a new car again.
I will pull the Coil Packs & Plugs off Cylinder #’s 2 & 4 in a few months to check for oil just to be sure.
The AutoLogic read-outs from my mechanic revealed a failing O2 Sensor as well, so I guess I will have to deal with that before I get the car Smogged in the next few weeks. I bought the replacements but really didn’t want to go down that route yesterday so that will have to wait for later this week.