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Johnny covered it pretty well. I'd only add a lower geared limited slip diff and maybe S52 cams if you have a lot of extra cashola to blow.
edit: Forgot to mention. Look up Raceland headers. People are saying very good things about them and they cost almost nothing http://sap082.channeladvisor.com/p-38-raceland-header-for-bmw-e34-e36-e39-3-and-5-series-6cyl.aspx
edit: Forgot to mention. Look up Raceland headers. People are saying very good things about them and they cost almost nothing http://sap082.channeladvisor.com/p-38-raceland-header-for-bmw-e34-e36-e39-3-and-5-series-6cyl.aspx