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- Modded
--'07 BMW M5/6.:Indianapolis Red
'91 BMW 850i J Spec Modded
'88 BMW 635CSi Lowered
'81 MB 500 SEC Koenig WILD RIDE