There are two rubber grommets between the master cylinder and the reservoir. Depending on which master cylinder you have, here are the part numbers.
ATE- 34311160133
Lucas Girling-34311163464
Look around the master cylinder area for the labeling that identifies your master cylinder. The rubber grommets are about $3 each at the dealer.
All you need to do is remove the remaining fluid in the reservoir and pull it straight up, remove the old grommets, clean the area of debris and pop in the new ones and install the reservoir, fill with clean brake fluid and you're done.
It's a typical problem on older E34's. Just don't touch the brake pedal when the reservoir is off.