thanks for all the replies..much apprecited..

Or even above the red line - ooh er.

Not necessarily, especially if you kick down, however it was an
embarrasingly long time before I discovered just how tough the spring was on
mine to make it happen!

It will select 4th eventually, but probably not much below 100mph.

Correct, although it is more like 55mph.

Because it is the same as D, unless you have more gears in the box (like my
740i) when you can.

You are right.

S stands for sport - this means that your engine changes up a gear at
higher revs; with your foot down it will nearly red line before upshifting.

E stands for  economy the engine upshifts much sooner - even with your
foot down it does not go above 4500 revs.

3.2.1 means you can select your gear manually as you say.

The problem is that "Sport" setting will never select 4th gear and hence
  always seems to be in one gear too low when you are not racing
around. "Economy on the other hand is hopeless if you are trying to race
around at some pace as you always feel in a gear too high.

If you are racing around choose sport. Otherwise choose economy for
driving anywhere it is much more economical and more relaxing. In
addition above 53 mph 4th gear locks up ( it feels like another up shift
but isn't ) This removes the torque converter from the equation and
increases the economy still further.

Also for reasons that I can't understand you are not allowed to select
4th in 3.2.1 mode either.

Dave M

Ok let see if i can explain this. I have a 1987 325i with auto trans. in the
middle of the console i have a dial
that state S/E/123 i think  E stands for Sport / E for economy and the 123
is probably for manual.
now my question is shoul I be using E when in the City and S on the highway,
or the other way around...s