http://www.geocities.com/bmw535i86/text/idle_FAQ.html
FAQ claims to apply to pre Motronic 1.1. Works on our '87 325is with Motronic 1.1. However, IIRC, I had to connect the ICV and "adjust" the hole size in the penny a bit.
See "penny fix" under KLUDGE.
Real Q is whether penny kludge might work on '89 525 manual with Motronic 1.3. Idle on '89 is low and hunt drops it lower. AC on raises the idle, as it should, and prevents stall. However, makes clutch engagement tricky in low, because rpm not easy to control/predict and I'm not much for girlie over rev on low gear clutch engagement.