Welcome to the 'club...and I agree that it's a sweet little ride. You're already off to a good start with an E30...it's a few hundred pounds lighter than an E36. Not as refined nor as comfortable though. I'd personally leave the S14 for the M3's...they're pretty expensive motors to buy & maintain. A lot of guys here choose a turbo instead, and the M42 is fairly cheap & common in case you blow one up. The Metric Mechanic M42 motors are also a great choice. They're pricey, but MM customer service is among the best. The S50 swap is also fairly common, but IMHO it'd be far better in an Eta donor...ruins the sweet little balance that the M42 is famed for...
It's good to buy any older car from a good guy. Still - any extra history he has on the car is a great thing to have. You should have a good idea when important bits like the water pump, radiator, profile gasket, timing chain tensioner and misc recalls were done.
Make sure the car isn't overheating! It's the #1 killer on these cars. One overheat and the head is wasted! Also make sure you check the upper oil pan bolts during your next oil change...they have a tendency to wiggle loose...and then you're pumping oil into the crankcase instead of the crank bearings.
As for performance, I'd go for a good chip first. We have a few decent chippers here, or you could go with the MarkD 91 or 93 chips. Excellent bang for the buck, especially during his spring sales. The light flywheel is another good choice, and bumping up the diff ratio will help as well. There are still 4.27 and 4.45's out there, though they're pricey and fairly rare.
I'd also be tempted to
remove the mess under the intake. It helps out a bit with rough idling, fuel economy, coolant bleeding, etc. Great update.
There's
a long thread about using later 4-hole Bosch fuel injectors from Mustangs and other Ford V8s. If your injectors need an overhaul I'd consider it.
Rob's COP kit is also a pretty good idea. The whole kit
including coils is usually cheaper than the OEM plug wires alone!
I'd personally leave the AFM flapper unit alone unless you've modified something else in the motor.
BMWMan91 is currently working on a MAF adapter. I'm sure he'll let us know when it's tested & ready.