Yeah it has an open diff. I should have budget for a real lsd, but welded diff would save some dough. I'm really leaning toward the Lexus V8 now. It has the biggest originality factor for a BMW swap. If I just swap a M50 it would have just been cheaper and easier to buy a 325 from the start and turbo it. Then I can get a nice 340i emblem or start tuning and get it to rev to 8400 with ITB then it would be a cheap E92 M3 clone. walterj brought up a good point about the brake booster that I hadn't thought about. Anyone have any more info about what would take to make one or relocated. The 4.0 V8 should be smaller than the chevy v8 so it may not be an issue. Guess I'll just have to buy everything and see if it fits.
One other thing that bugs me is there is no simple manual transmission for engine. So I'd have to make an adapter to a supra transmission, or maybe even the Getrag transmission I have or use and automatic which would lose some of the fun.