The induction coil on the spark plug wire is used for DME feedback/control of ignition timing. Camshaft position is fixed on the S38 engine, no VANOS for E34 M5's. Spark occurs only on the compression stroke and is determined by the distributor cap and rotor which is driven by the camshaft. For the S38 engine, the distributor is driven by the exhaust cam. During initial start up and warm up, and all RPM's the DME is adjusting ignition timing for best performance and driveability. If the referenced device is malfunctioning, am guessing the DME defaults to a particular ignition setting which is likely rather conservative. Hope this helps.