Just thought I'd update this seeing as there's been a bit of progress.
Last May I bought a 325 Sport engine and gearbox and swapped it in over a long weekend. For a £100 engine it went rather well and when I fitted a 4.25 diff it went better still. It gained a rather loud Scorpion exhaust and stayed like that over the summer. I think I did around 600 miles.
In September I helped break a 540i and got the engine for buttons with the view to building a bit of a sleeper. I soon decided that that it was a shite idea and wasn't going to end well.
I sold the engine (and made a decent profit) which was spent on an M52B28 crank and rebore for the old 320 block.
The idea was just to throw something fun together without going mad and spending loads of money.
Unfortunately when it found itself in a nice (cold) unit I got a bit carried away with the taking bits off and poking.
Looking through the forum it seems that I'm just suffering the usual parts, the the boot area seems suspiciously good though.
I've decided that I'm going to stick with it and fix it properly, I know it's a more-door

but I'm a bit attached to this car (which is dangerous, I know!).
The plans for now are to make it into a bit of an Alpina rep with a nice M20B28 up front.
A bit like this but in Alpina blau.....
