Prior to this turbo V8 BWM wagon, the owner had already installed a Chevy Gen 1 motor / T5 trans into a 1984 Mazda RX7, a LT1 motor / T56 transmission into a 1975 Datsun 280Z, a Chevy Gen 3 LM7 5.3L V8 / Tremec TKO600 transmission into a 1988 Toyota Supra, and a Chevy Gen 3 L33 5.3L High Output V8 into a 1988 Mazda RX7 convertible. BWM sent this 1994 BMW 525iT Wagon from the factory with a 2.5L straight six and automatic transmission. This project began in September 2007 and has a very detailed build recipe that has a bunch of useful information.
Right about now you are probably wondering, why not use an LS1? Often, people think the LS1 is the only way to go but in reality the truck motors only give up 400 ccs and around 20~30 HP from an LS1. Most of the LS1 motors for sale are in the range of $2000 and have 80K+ miles on them. The iron block truck motors have a lower 9.25~9.5:1 compression ratio, making them a better candidate for a turbo setup.
After carefully covering all options he decided to go with a L33 all aluminum motor from a 2005 GMC Sierra with a Z06 cam and a set of LQ4 heads to drop the compression to just under 9.0:1. The T56 six speed transmission is from a 2002 Camaro/Trans Am. Finally the engine would be turbocharged since the parts from a previous swap were just lying around. This combo should be able to make roughly 500 horsepower with only 6 psi of boost.
Make sure to check out this build because he has a lot more information than I included in this article. I would have to say this is one of the most detailed in terms of parts used of any swap we have covered here on ESD.