The E36 uses the Motronic 1.7.2. It has support for the knock sensors as well as the DISA intake manifold.
All US cars had lambda input on their Motronic units, and definitely run in closed loop when not at WOT. Definitely do cut off fuel while coasting as well. Just look at the instantaneous MPG gauge when you got off the gas 100%. If you open the throttle even 1% the needle will make an abrupt change as the injectors begin firing again.
E30 M42: Bosch PN 0 261 200 175, Motronic M1.7 (
PIC)
E30 M42: Bosch PN 0 261 203 282, Motronic M1.7.2 (
PIC)