bizz wrote:I appreciate that the BMW engines can make good power, however cost is prohibitive here (in australia) for aftermarket parts & even replacement engines. My biggest concern is spending big $'s on an engine that is already 30 years old.
If you don't want to spend big money - personally for me, the best way is to find 3.5 M30 engine with some proper transmission (Getrag 265 will be OK).
If the M30 engine is from an e28/e23/second generation e24 - it is direct fitment, but you have to find an oil pan and oil pump from e12 M30 engine.
You have to search for a "new" driveshaft (or the first part only, with proper balancing). If the M30 engine would be from an e32/e34/last e24 - you have to change the engine mounts (you can make a search in this forum for this topic), the issue with the oil pan and pump, along with the driveshaft remains.
If you have some luck - you can find a S38 engine (B36 or B38) - than the case is similar to the e34 (and you'll have good amount of HP).
In your case - with 520 e12, you have to think for better brakes and suspension, for LSD and some other things.
If S38 variant is expensive for you - than you can use 3.5 M30 with chip tunning and get something around 240 HP or even change the engine management to MS for example. If this power is not enough - you can add turbo and increase the power to 350-400 HP at the cost of 5000 USD, using only new parts. If you want to go further - it is realistic to achieve 700 HP, but the money will be much bigger.
Please, choose the most suitable for you variant (the desired money limit) and then we can discuss it.