There are almost no 1988 M20 engines that have not been rebuilt since then. Mine has, its an 8/88 build date and new torx bolts were used.
So you should be set!
AS for the plugs, it is hard to say since the cars were equipped with the wiring harnesses for all options, but the options were never installed for some models depending on what the customer ordered.
My guess is it has to do with parked car ventilation or some other IHKR related system, but the option was never installed. You will notice later on that newer cars do not have these connectors because BMW wanted to save some money.
That second picture though!!! Very interesting!
That is the vacuum operated climate control temperature sensor. Only the very very early E34's had those. There should be a vacuum line coming from the engine that plugs into that the rubber outlet on top of the sensor. The sensor should also have its own plug that goes to the IHKR control module.
I see that they never opened the cutout for the OBC/check control gong next to the temp sensor in your panel.
Do you not have an OBC? What is the build date of your model? (check the drivers door jamb).