I believe that car has a leaky headgasket. A few members and I were looking at it pretty closely at the bimmercruise this year.
Looked rough but with some work it could make a nice daily driver.
The overheating can be the clutch fan.
I hope you didn't pay more than 3 K for it so that you can have cash to throw at it. Most parts on a e34 M5 are double the price of parts for a regular BMW (ask me how I know).
Autopartsway.ca has some reasonable prices.
www.enthusiastauto.caNeed a car???
--'00 BMW ///M5 .:Jet BLK/BLK:. Individual-1 of 1 - Style 65 Wheels; 9.5" Square Set up;275 Tires;10mm/3mm Spacers; Black Kidneys;Muffler Delete; 3.5" Dual Tips; Beast Power; "Dinan" Ducts; E60 SSK; BC Coils
--'04 Volvo S60R/6spd.:Nautical Blue/Gobi&Black
'00 BMW ///M5 .:Avus Blue/Grey/Black:. 1 of 8 SOLD
'88 BMW 635CSi Blue/Tan Sport
'81 MB 500 SEC Euro Koenig