sounds like u need a new throw out bearing. if you have a 1989 525i then you have an M20. I had a 1990 325i with the same engine and tranny as yours. does it sound like marbles in a can? goes away when the clutch is in? thats typical of this engine/tranny combo. I jsut lived with it. tranny fluid wont help you/ unless the car needs a clutch i wouldnt worry about it. its actually normal from what I have been told. as for tranny fluid redline MTL was the fluid I used.