freakshow covered all of the key points.
Definitely spend a lot of time reading the FAQs on m5board.com
There's also links to buying tips and a buying guide somewhere that tells you what to look for as these cars get older.
I purchased one a few months back--spent quite some time looking for one. You'll definitely want one with full service records and documentation of proper maintenance. The torque is addicting
Similarly, the M5 has also been a car that I've really wanted ever since it came out. I figure that now is as good time as any to buy one. That and it only comes in manual, which is what I prefer.