... The fellow I bought the bike off said he had it happen twice so clearly from what I have read it has never been rebuilt properly. The bike has 127000K's...
Thanks for the bike history. Very informative. "Unembellished" or "summary" bearing replacements where the bearing is replaced but the preload is not calculated are destined to fail again.
Sorry, I am a "damn yankee" and have to think in miles: That's about 80K miles, and the bike is on its third final drive failure. That's about 20K miles per bearing which is consistent with those early bikes with serious excess preload on the bearing. The majority of those early bikes which failed, failed around 20K miles. The results of my inquiry over the years found that those bearing were over preloaded about 0.15-0.20mm.
Here's a serious short cut to a rebuild: Follow jzelier's excellent write up: http://www.bmwlt.com/forums/technica...tml#post892450
When you get to the point where he says if there are two shims, toss out the thin one, do exactly that. The thin shim will be a 0.15mm shim. (Added on edit: given the drive has been worked on a couple of times already, you never know what is in there. I suggest you put a micrometer on the thinner shim just to confirm it is 0.15mm.)
If there is only one shim, put a micrometer on it and then replace it with a shim that is 0.15-0.20mm thinner.
That is clearly an estimate based on a review of failed drives, but short of doing a proper rebuild (which should give you a 100K+ mile trouble free drive), you'll get at least another 20K miles and probably much more than that.
If you are willing to remove and disassemble the drive, and take pics along the way, we'll help with checking for other know problems in the drive.
You'll need a seal and crown wheel bearing, time and tools...
I wouldn't just ride it.