Serious Idle Problem with my e34 525i

[^_NaDiAda2nd_^]

I recently bought a 1990 525i. It has the old m20 engine in it with a whopping 169 hrs!!! Anyway, the muffler went out and i havint replaced it, no biggy to me though. Just loud as hell.....Now the check engine light comes on and the idle is messed up. I replaced the intake manifold seal, the fuel pressure regulator seal and shes still doing it. Not as bad as before but still doing it. The check engine light comes on as well. If the engine is cold and i start it....its fine.... but if the engine has been going for a while, i shut if off, and 20 minutes later need to drive again....the idle goes between 400 and 1000 pretty bad. After about 10 mintues or so, when its back to full temp. its fine again and runs 100%. I put fuel injector cleaner in it, i replaced the spark plugs. I dont know what else to do!! Im thinking it still might be the ignition cables or the starter or something electronic. I bought a reset tool for it that also tells me codes. It says the lambda is bad. Probably o2 sensors. Let me know what you guys think about it. i need some help seriously. thanks for reading this.

[VenomRS4]

just a thought, have u checked the idle speed regulator? On my 533i, mine was bad. The engine would go down to about 500rpm and then jump to 1500 when it was cold. After I replaced it, it was fine.

[^_NaDiAda2nd_^]

Actually that was the first thing i checked, and it worked fine when i disconnected it and connected it to a battery to see if it worked. I think its the cat and o2 sensor now, since the cars power is now dropping too, with the gas mileage. I found it pretty cheap, everything i need for about $400. Ill let you guys knows next weekend what the results of the operation where. thanks for you input though