Hey, thanks for the replies guys. I broke down and took the car to a shop, saved me a lot of time.
So here what my solution and fix was FYI:
I took the car to a German specialty shop. The owner used to build and work on m42 engines for BMW so he knew exactly what to look for. He said a leaky exhaust or bad cat is almost Always the cause on these engines.
Sure enough, we looked at my exhaust, it had a few leaky spots from crappy welds. The catalytic converter was also bad, it was brand new too, but it was a cheap unit the previous owner put on.
I had a new complete exhaust system put on the car. Sounds better and the car runs smoother now. Just retested my emissions, Nox went down by more than half. At the 15mph nox test, the nox level was almost at zero, 0 . lol
Needless to say i passed