I would buy a diesel over a hybrid, but I would get a 535i over a 535d without hesitation. We've had an X5 35d for nearly two years and its been nice, but there are definitely cons in diesel ownership.

Examples are:
Dirtier pumps
Not every station has diesel
Some stations only have one or two diesel pumps and they are usually occupied by gas cars
Not all pumps have the correct diameter diesel nozzles, which means the security flap in our X5 won't open
Oil changes are more expensive and require refilling the dif fluid ($200+ even at an indy)
Engine clatter
Really low redline
Different power delivery as the engine doesn't like to rev
Typically higher initial purchase price

I am ok with the clatter, low revving nature, etc. in an SUV, but its not ideal for a car, especially a performance car, IMO. That's why I would choose the 535i over the d. Plus, with typical mileage, it really does take years to recoup the initial costs in fuel savings.

That said, I do like the torque and at the time, the 35d got much, much better MPG than the 3.0i or 4.8i. Thats just not the case with the 535d/535i.

In reality, I wouldn't buy a current 5 series with any engine. The car has lost it's edge and is more of a 7 series than a fiver. It's chassis is based on the 7 and that hurts it dynamically. Plus, the steering feel isn't great anymore. While the e60 was winning comparisons even in its last year of production, the f10 started losing them as soon as it was introduced.

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