Great build so far, I am enjoying following along

All 00+ BMW's use fracture split connecting rods. It's pretty cool tech - and like you mention, no chance of mixing them up.

I don't think the X5 oil pan won't allow the engine to fit in an E36, I don't think it would even fit in a Z3 which has the firewall set quite a bit further rearwards
X5 pan is really a mid sump and even with a true rear sump setup it's a tight fit into an E36 (or a Z3 for that matter)

N62 oil pans are rear sump and can be modified to fit an M62, but some of the modifications are fairly extensive (extending oil pump drive shaft, etc). I've yet to see a finished installation with this conversion done.

Soaking the pistons in diesel works pretty well to clean them.