Over here, the 525i is viewed as the "red-headed stepchild" of the 5 series range (in that era). The 535i is much more popular among drivers here. The added displacement fixes the "no torque at idle" problem. It was actually more popular than the successor car in the same body style, the 540i, and the 530i never sold well here.
I have experience with the 535i as well as the W124/W201 E-class cars (the 190E is technically an E...). The 535i (and the 525 by extension) is a wonderful driver's car - but as equipped in the US, they are fairly complex and they like to break far more than the Mercedes. Common problems here are water pump failures and the *very* expensive dashboard message center failure. Parts are also not cheap as BMW didn't seem to believe in parts bin engineering (lots of 5-series specific parts), and it seems like half the bloody things have to be sent in from Germany at great expense.
With the Mercedes, the parts are actually surprisingly cheap, and in some cases you can find more Merc parts in a parts store than a given Chevrolet model, a distinct rarity among European marques. This is probably due to the fact that Mercedes believes in parts bin engineering and in the W124/W201 era, parts from a 190E are quite often the same parts off the S-class, or the S-class parts will fit.
My personal take is that the E34 BMWs (the 87-96 5-series) is a better drivers' car, but the W124/W201 is cheaper to run, far more durable, and easier to sustain here in the US. And it's not too far off the E34 in terms of being a driver's car - certainly most of the difference can be made up by installing parts from the vast aftermarket for W124s and W201s - or by swapping in parts from a sports model of the same type.
By the way, it's not an "American" engine thing to have torque at idle or just off idle - the classical Brit engines are that way too. Best example of that, is, of course, the Jaguar sixes.