The drop in K&N isn't one that you spray oil in. Just drop it in place of the OE. I needed a new filter on my 540I and went with the drop in K&N. Can't tell you if it added any HP, but you can hear the intake a little more, which I like. FYI, the K&N cone filters that need a very light mist of oil are fine. 99% of the users that have had problems with their MAF have applied way to much oil!! Most get it almost dripping wet. It needs to be so light that you still see the white color of the filter, so none will get sucked in. I've used them on a number of cars and they've always been a benefit to a small HP increase and zero problems.
I've had quite a bit of experience with tuning high performance V8's, i.e. Corvettes, new GTOs, Pontiac Firehawks, Supercharged GTPs and others. First, any type of performance tune will not improve reliability, just the opposite. You're messing with the brains of the car, obviously. Any changes from the factory has a chance of problems now, or down the line. Example: if it was a car under warranty, it would void your warranty. It's always best to know other people that have used the tuner that you want to use. Don't just go by what he says!!
This guy must be very astute in the tuning of BMW's specifically, not just some performance tuner dude! If it was me, I'd get a handheld tuner, that you can install a number of preset tunes yourself. You can save your factory tune in it and revert to it if you need or want to. They may not give you quite the same HP increase as say a true dyno-tune, but they are safer, easier on the car and more reliable without a doubt. Some cars have popped their engine on the dyno during a tuning session, seen it happen. So if he's just using a laptop, and doesn't have a dyno to measure your before HP & torque numbers and then your after tune gains, this guy is NOT a true tuner and I would NOT use him.
Look around at what your options are from Dinan, etc. I'm not up on all the available handheld tuners or "chips", which have been somewhat outdated by the handheld devices, at least in the rest of the performance car world. You be glad you did. Lastly, I wouldn't expect huge numbers from just a drop in filter and a tune. Usually, other supporting mods are installed first: headers is almost a must, a better intake than just a drop-in, a true cat back exhaust, if a single pipe is used, which is OK, it must be 3" in diameter, and other parts, like forced induction, small nitrous kits, etc. I would not use a tuner in your situation, only minimal mods, etc. Last time, look for a handheld tuner or a "chip". These are by far your safest options. They're tried and true to your BMW. Not worth taking a chance with what you have now!!