Old 7 series BMW's are notorious for their upkeep prices. The first thing I would do is an oil change, switch to a good fully synthetic oil such as Amisol or Redline, there are many others. You want a good oil because it will help cool your engine as it circulates through. The next thing I would do is a coolant change, this will also keep your car from rusting. Do a 50-50 mix of coolant and distilled water. ideally, this should be done every 2 years at the most. I am posting the link to a website below. It has various service recalls for your vehicle, these are know problems the dealer should cover, but maybe not 16 years later. However, if what I suggested does not work your problem may be here since cooling issues seem to be listed a couple of times.
http://www.automobilemag.com/am/1991/bmw/7_series/recalls.html