Price doesn't seem to be too unreasonable given it has records, new motor, new clutch and some other parts. You still have maybe some suspension work to be done in the future if it has not already been done. And, it is a pretty rare 5 speed car.
Fuel mileage on my previously owned 530 with auto San Diego to Colorado was 28mpg at an average travel speed of about 90 and it was pretty consistently around 24mpg combined city/communte highway driving here in San Diego. With a 5 speed and an even remotely light foot you should do better than 30 on the highway.
The 530 is a terrific car and with a 5 speed and new alusil motor, it removes all the costly problems down the road. The auto transmission is a very expensive replacement cost and you don't have that issue.
You should buy the car and enjoy. If the asking price is 10,250, start at 7500 and work up. Get it bought for $9k or so and you'll be fine.
Mike Holbrook
Meridian, Idaho
1992 535im, 17", Euro M5 Throwing Stars 8's & 9's, FK-451 235/45s & 255/40s, M5 Sway Bars 25/20, Conforti chip, Lowes Ram Air, glass sunroof