It means the former.  But all of the hydraulics have been replaced.  I
don't see anything else that can be replaced.  I do not see any sort of
check valve anywhere that could be leaking, either.

It will remain engaged, with the pedal stuck to the floor, which is bad.

He has been able to reproduce it while driving but not up on the lift.
I am annoyed that he has been trying to fix the problem by swapping things
out, but by the same token everything has BEEN swapped out at this point.
--scott

Can't tell what "clutch remains engaged" means? Does that mean the
transmission is engaged or does it mean the opposite? If it means the
former it is pretty evident that the hydraulics have failed. If it means
the latter then there is no clear indication of a problem with the
hydraulics and the mechanical linkage would likely be the problem.

What does "clutch would open properly" mean. If you don't do the pumping
thing then the transmission will remain engaged? or remain disengaged?
or what?

Has your mechanic actually been able to reproduce the problem or is he
going only by your description of the problem? If he has seen the car
when the problem exists I would take it to another mechanic.

-jim

1986 BMW 535i.  I bought it a few years ago with a bad transmission and only
120k miles, and a friend of mine dropped an '83 junkyard transmission into it
and a new clutch.  It's been running well, and I have slowly been cleaning
various things on it up.

Starting around 220,000 miles, the clutch began sticking closed.  That is,
I'd put my foot down, the pedal would stick to the ground, and the clutch
would remain engaged.  I could pull the pedal up and pump it down a couple
times and the clutch would open properly again.  It started happening now
and then, and then more and more often.

I replaced the plunger on the clutch master cylinder, which was leaking,
on the suspicion the seal in it was bad.  Didn't fix anything.  Took it
to a respected BMW indy mechanic around here, who swore I did it wrong and
replaced the plunger again.  Didn't fix anything.  Replaced the whole master
cylinder.  Didn't do anything.  Changed the fluid and replaced the slave
cylinder.  Still no go.  

Now, I am assuming that there is no possibility of the line between the
two cylinders being an issue, and no backflow valve anywhere in the system.
Is this correct?

Recently it got worse, and I took it in to him again.  At this point, we
figure it has to be something inside the transmission.  He drops it, and
replaces everything that looks even a bit suspicious, namely the throwout
bearing release lever, the lever pin, the clutch release bearing, and
the shift bushings.  Everything else looks clean, though neither one of us
could see how any one of these would cause the problem.

Putting the thing back together, the problem is now actually worse, since
the friction point is closer to the floor than it was before.  The car is
now doing it almost all the time, making it impossible to drive except on
the highway.

Help!  Anybody have any suggestions about what could be causing this issue?
--scott