I have an E34 that my wife drives. a '91 model.
Its a really fabulous car, smooth, quiet, comfortable, reliable.
The engine is indeed very reliable, no timing belt to replace and the '93 on
has Vanos and therefore more torque.  It has 6 coils and no distributor.
I have had very little trouble but the radiator plastic did fail and a
u-joint in the drive shaft went bad, requiring replacement of entire shaft.
The transmissions have changed a bit and the year you mention probably has no
dipstick.
Have it checked out thoroughly on that score but it will probably be fine.
A weak point is the front suspension which can cause a brake shimmy when
certain bushings get soft.
Some years had a self levelling suspension and use a special fluid in the
power steering circuit.   My local oil change place put atf in it but paid about
$60 to flush it and replace it with Pentosin after I pointed out their
mistake.
Other than that, its a magnificent vehicle that I am able to maintain easily.
  We get about 24-25 mpg and use no oil between changes (5k). Ours has about
137k
At 120k it should be broken in.   They tend to rattle a bit when first
cranked up as the hydraulic lifters pump up.  I wouldnt worry about this at all
unless it lasts for more than about 3 seconds.
Stay away from the 530 and 540 models.   They had a problem with Nickasil
bores but were mostly fixed under warranty but when you take them in for a
service, they smile...but you wont.

good luck,
Steve Cotsford
Columbia SC