Welcome to united man. The 5 series is a great car, iv owned two so far and I love them.
As for some of your questions, From 1996 - 1998 the 5 series went through a transition, 1995 being the year they stopped producing the e34. They then started producing the e39 in 1997, then a year later the wagon was introduced. If you go with the e34 525i then it will have the M50 engine which is a pretty reliable engine except for the ignition coils, which isnt very expensive to fix. If you go with the 528 it will have the M52. The M52 is also a pretty good engine, and it has more torque than the M50. Some of the problems with the M52 are failure of the water pump, and also the VANOS solenoid.
Im not really to sure about stereo(being that i dont really care what the stock is) so not much info there
As for the MPG on the cars you could expect the e34 525i to get anywhere between 18 - 21. For the e39 M52 anywhere between 20-24. The inline 6 engines in both models are very good engines, as i stated before. Now with some of the V8's in the 530i and 540i, from what iv read they tend to be more problematic than the I6, some one correct me if im wrong im just not as familiar with those engines as i am with the I6
I hope i anwsered some of your quetions.