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early and late 318iS (E30 and E36) engines

Hi all,

I have a question regarding the motor in the current shape (E36) 318iS 
(16-valve 1.8 L). How different is this to the engine in the old-shape 
(E30) 318iS that appeared in about 1990? (I am assuming the US market got 
this model). 

The engine in my '95 318iS feels tight, even after nearly 8,000 miles, and
does not like more than about 4,000 rpm in any gear. A girl friend has a
low mileage '90 318iS with the same 1.8 L engine that sings by comparison
and (she says) will rev happily to over 7,000 rpm. 

My dealer tells me the engine in mine is perfectly OK, and just needs 
running in; if so, how long will this take?

So... has anybody had any experience of early and late 318iSs? Does anyone
know what differences there are? If so, can I make them easily?

Any help much appreciated.

Andrew (ajt@domain.elided).