to get the new pads in. Check the level of fluid in the reservoir...if near full mark, you may want to siphon a little bit out to allow for some backfilling as you compress the piston, which will force some brake fluid back into the reservoir. I use a c-clamp in the center of the piston. Compress until the piston is flush with the body of the caliper, then your pads will fit over the rotor.
Your first purchase for your newly acquired E34 should be a Robert Bentley manual...the "Bible" for E34 owners!
Available online...check links on this site.
Welcome to the family!