Jeff:

3. Seems like an automatic engine harness.
4. It's only the oil level plug thats been cut off. Three blue cables.
5. Correct.
6. Yes, it's a E28 535i manual gear box on it. There's been done some work either to shorten or lengthen the axle. This was done before I bought "the project".

I've already got an E34 engine laying around, with a complete drivetrain and front and back axle.. it's the backup plan. But i'd prefer to get this E28 engine running, because the E34 engine was originally bought to convert the 520i to a 535ia.

Why would the E28-engined E34 end up underpowered?