Just bought a 1997 318is for $500. Bargain or money pit?

I have been looking for a car for my wife to transport our first born when he arrives in April. Being a three time 318is owner I liked the idea of getting her a 318is 4-door auto. Most of the ones advertised are way too expensive for a 15 year old car, most at least $7000 or $8000, and we looked at one on eBay for $4200 which was an a bit of a mess with poorly repaired crash damage. Then I came across one advertised on Carsales for $1999, Boston Green, with expiring rego, 245k on the clock and a bad auto transmission (no reverse), and a major oil leak amongst other problems.

Anyway I just bought it tonight for $500 (I didn't want to buy it but they kept lowering the price until I did). I figured if I couldn't fix it up economically it was worth at least $500 in spares and scrap metal.

It actually drove home very well (I didn't have to reverse) and I am quite pleased with it. It was enjoyable to drive, despite being auto, although I didn't rev it much because I figured there was probably next to no oil left in it (nothing showing on dipstick when I got home). The suspension felt a little sloppy at times, not as good as my well-worn manual 318is coupe. I was very surprised that it came with a full compliment of keys and manuals, and that most things worked (radio, central locking, windows, mirrors). It also has a CD stacker (yet to be tested) and near new rear tyres. It is very dirty inside and out so will have to give it a thorough clean before wife approves of purchase or not.

Here's the list of problems:

* Auto transmission reverse not working (engine just revs with no movement)
* Climate control fan not working
* Massive engine oil leak
* Airbag warning light on
* No horn
* Cracked windscreen
* Driver's seat is down to the foam in places
* Leather worn badly on steering wheel
* Sunroof stuck, back has dropped down, lining is inside roof with sunroof panel exposed
* The centre panels of the front door trims both need replacement due to being missing or damaged
* Missing the bump strip from the front passenger door
* Rear drivers side window seal squashed by window
* Warped passenger airbag cover
* The glove box lid catch has cracked
* Missing the little cover in the radio where the cassette goes in
* The bonnet has large rust spots and the paint has peeled
* The front windscreen lower seal has deteriorated and needs replacing
* Outside temperature gauge display not working
* The ignition lock is a little weird, but does seem to work, and the keys are quite worn

I suspect that this is only the beginning of the list.

I found some receipts in the with the manuals, looks like I am the third owner, the last owner had it since 1998 when it was bought from a BMW dealer with 20,000km. Cost was $54,000!