What type of diff oil should I use?
 

2.89 Large Case - Open Diff.

It hasn't been changed recently, I don't even think the PO did it. What brand and weight should I use?

Anything that is either semi or fully synthetic, from a reputable manufacturer. This is going to nearly double the price of your oil, but since we're dealing with less than 2 quarts and semi-fully synthetic oil lasts much longer and gives better protection while you're at it, it is truly value for your money.

Are you having any rear diff problems? Do you hear any knocking sound coming from the back, especially when you do a medium or soft brake ? If it is within the rear diff itself, this might be a good time to change the diff, or possibly use a thicker oil to see if the thud is mitigated.

I am pretty sure it calls for standard 75-90 GL-5 gear oil. I would run a full synthetic. I have used Amsoil, Redline and Royal Purple as well as Valvoline for rear end applications. For driveline fluids I like Redline best.

Redline FTW

Amsoil for years and years

Sent from my Desire HD using Bimmer App

FTR: I'm going with two quarts of Redline 75-90.

So, changed the fluid. The oil that came out looked brand new. Topped it up with two quarts of redline 75-90 and the car feels EXACTLY the same. I didn't expect any difference in the way it drives but I am glad I got that job out of the way.

Btw, incase anyone doesn't know already. Gear oil is the worst smelling fluid you use in your car. I suggest you take your time removing the drain plug so it doesn't coat you in the stench.

Diff oil will never look used. Every 2yrs or so or 50k is fine.