My friend bought the EXACT same model and year as the one you are looking at. 97 318is. His had 89K, and he got it for $7K-$7,300. But this was really clean, and well maintained and a 6 disc changer.
I'd get it checked out....because we also had another 97 318is last week that was in....and it had 2-3 pages of fault codes (things that are wrong with the car)...and it was running rough.
So definatley check it out, and drive it....and I'd have to say with pretty high miles, $4,500-$4,700. $4,500 if she'll go that low or lower
(that'd be a good deal). You'll prolly end up getting it for $4,900-$5,100 if she's asking $5,500.
What color is it?