1. The price is a bit high for the mileage and model year IMHO. Go to edmunds.com or kelly blue book (kbb.com) to learn more about the wholesale/retail prices of this car. Once you have a price you are comfortable with, then make an offer.
2. The "short block" issue was with the 4.0L V-8s whcih were not used in 97, so your are clear of that issue. 95 or some 96's have an issue. To learn moe about this go to
www.koalamotorsport.com and click on the Nikasil vs. Alusil V-8 link.
3. The E38 model was updated in the model year 99, which began production 9/98, so there are some good reasons to buy a newer model if you could afford to. The 99's have more torque on the engine thanks to Vanos, there were several cosmetic upgrades, and some options became standard. For a complete listing of the updates, rear or search on the
www.bimmer.org E38 forum
john