I have a 1995 525i with 173K miles (purchased with 30K and have put on 143K of my own). It runs sweet! If only it would die I could justify (to the wife) a purchase of a new 530 but that day appears to be long off.
You may want to consider a 530 or 540 but this is the most common 5 series and there is something to be said for that.
Have never had any white smoke but then again I use my car nearly everyday.
Have had a few starting problems in (for my area) cold weather (<5 degrees F). There is at least one other post on this issue. My recommendation is put in gas dryer in the winter and make sure your spark plugs are in good shape.
Have had a few starting problems when the car has been run for less than a minute such as when moving the car from the driveway to the street. Simply run the car for at least a minute before shutting down.
Other than 'normal' wear and tear, here is my recommendation on things to watch out for/inspect before you buy:
1) Imminent front end repairs. Mine cost me about $2K. Consult a mechanic for this one.
2) Imminent water pump repair. Have it checked out or simply be aware that mine quit at about 120K.
3) A/C auxiliary fan (it is in front of the radiator). Does it work? Sound a bit rough?
4) Headlights (the buckets not the bulbs) might be beat up at 100K and need to be replaced.
Some other hints:
1) I am not sure if traction control was an option for this year but my car has it and I would not recommend buying the car unless it had traction control. Seriously!
2) If the A/C doesn't work well inspect the A/C auxiliary fan (it is in front of the radiator). Start with the 30amp fuse. Next, consider if the cabin air filter - is old/blocked?
3) Run a bit thinner oil than recommended. I run 10W-30 full synthetic (for a Maryland climate).
4) Run your tires at 31psi front, 38 psi rear adjust to your preference.
4) My VANOS (spelling?) unit has slight tick but at 172K miles you have to expect some wear.
5) Some of my fuel system hoses (not the fuel line itself) degraded over time. They became either brittle (and split) or soft (and mushy). Normal wear. Check the breather valve (BMW's word for the PVC valve) for blockage.
6) Parts and service are not cheap. However the parts are generally of high quality and last (verses other cheaper cars).
Give this model some TLC and it will run like a dream. The ignition and fuel system are quite nice and can adjust to some neglect but, in general, if the car is well taken care of it should start immediately, idle very smoothly, and feel like it has power.