Just to reconfirm, to bypass the heater core on a 89 535i E34 model I simply use a plastic "T" an connect hoses 2 & 3 to the horizontal on the tee and hose 1 to the vertical on the tee.
Hose 2--|--Hose 3
|
|
Hose 1
Hoses #2 & #3 are the coolant-in and hose #1 is coolant-out (return).
Thanks.