As I have mentioned before, the Baur's engine is tired, and smokes quite a bit, although it doesn't miss a beat. Well, I acquired a few weeks ago a used engine, which was previously on a friend's E30. He installed a newer M52 in his car and offered me the M20 at a good price.
The engine is essentially a 1988 2.7 Super ETA with 325i fuel injection and computer. I have done some research and apparently all I need is a cam with longer duration to make it a strong, torquey engine. Hopefully I will be able to have significantly higher power and torque than my car's current M20B20, at a reasonable cost. Plans are to install it some time during the Summer months, so I'll post here any progress.