Thought I'd post this up here in case anybody searches.
Have a set of Ground Control coilovers with koni adjustable rear shocks I installed during a suspension/drivetrain overhaul on the E36. Everything was either replaced/upgraded/restored, so when I developed a clunk sound from the rear end, I had too many places to look and it was a constant search for the source which was never isolated and repaired. Basically started to hate driving the car.
In the end it ended up being the movement of the adjuster on top of the Koni shock (pictured below). Placing a small rubber o-ring in the gap pictured below prevented it from moving up and down which eliminated the annoying noise. Finally this quick fix resolved the annoying clunk sound which haunted my car for some time now. Hope this helps others who might have the same issue on suspension using Koni yellows.