e39 m5 differential
Discussion
I was in exactly the same boat as you about a year ago.
I bought a used 'good condition' E39 M5 LSD unit, drove it to Germany and back (it didn't lock up very nice), so decided to re-plate it with new clutch plates. When I stripped it I found that there was quite a bit of damage, and some bits weren't salvageable;

I then bought another unit, that was damaged (siezed for some unknown reason) in a hope of salvaging the bits I needed;

Turns out this was just as bad, and none of the parts I needed were salvageable.
Then I did what I wished I would have done in the first place, bought a Quaife ATB. Not cheap I agree but I have spent (wasted) more than the value of this Quaife on absolutely scrap parts.

If you've got any questions about the fitment/mismatch of parts you need to fit it to a 540 just throw them my way pal, more than happy to help! Mine's a manual by the way i'm unsure on the propshaft mismatch that you'd have to do if yours is an Automatic?
Just to add, the only way I would possibly even think about buying another used LSD was that if it had either been in bits and checked over recently with photographic proof, or if it has had a rebuild with new clutch plates, again with proof. It makes absolutely no odds how well the donor car drove with the diff fitted, that one with the cracked friction plates and the clutch disc friction welded to the planet gear cup drove over 2000 miles in 5 days with runs on the Autobahn off the clock, and 5 laps of the Nurburgring thrown in with absolutely no issues immediately before it was removed and pulled apart.
James.
I bought a used 'good condition' E39 M5 LSD unit, drove it to Germany and back (it didn't lock up very nice), so decided to re-plate it with new clutch plates. When I stripped it I found that there was quite a bit of damage, and some bits weren't salvageable;

I then bought another unit, that was damaged (siezed for some unknown reason) in a hope of salvaging the bits I needed;

Turns out this was just as bad, and none of the parts I needed were salvageable.
Then I did what I wished I would have done in the first place, bought a Quaife ATB. Not cheap I agree but I have spent (wasted) more than the value of this Quaife on absolutely scrap parts.

If you've got any questions about the fitment/mismatch of parts you need to fit it to a 540 just throw them my way pal, more than happy to help! Mine's a manual by the way i'm unsure on the propshaft mismatch that you'd have to do if yours is an Automatic?
Just to add, the only way I would possibly even think about buying another used LSD was that if it had either been in bits and checked over recently with photographic proof, or if it has had a rebuild with new clutch plates, again with proof. It makes absolutely no odds how well the donor car drove with the diff fitted, that one with the cracked friction plates and the clutch disc friction welded to the planet gear cup drove over 2000 miles in 5 days with runs on the Autobahn off the clock, and 5 laps of the Nurburgring thrown in with absolutely no issues immediately before it was removed and pulled apart.
James.
Edited by James540 on Thursday 18th May 13:44
Edited by James540 on Thursday 18th May 13:45
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