1988 325is starter problem?

I have a 1988 325is and was driving when the engine suddenly cut out. When I turn the ignition, the starter motor seems to whirl but no contact to the flywheel is made. If I put the tranny in gear,(5 speed) then turn the ignition, the starter engages and and the car lurches on me. I wasn't able to start it with the attempts while in gear.. Any clue as to why it would engage in gear and not while out of gear? Also, If I put the tranny in gear, apply the clutch, the starter will not engage, just whirls... I checked the under hood fuses and they appear fine. .
Any help would be appreciated and possibly save me an expensive mechanic bill!!!

Thanks for any reply.

Sounds like your fuel pump in the fuel tank has gone out. Mine has died twice so far (my 88 325 has 218000). I was told you need to fill up before your fuel gage hits the red. That way the fuel pump remains submerged in the gas which cools the little electric motor on it.

I checked out the pump and I'm getting pressure. It is strange that the strater will engage while the transmission is in gear, but when it is not in any gear( 5 speed manual trans), the starter motor just whirls with no flywheel connection. Could it be a fuse of some sort. If so, strange that it would attempt to work while in gear and not work while out of gear. I read something about some switches that are flywhell sensors. Could they have anything to do with the starter not engaging? All other electrical is working properly (lights, horn, stereo, windows, etc...). Any ideas?