I recently acquired a one owner 2001 740i sport with 100k miles. I do use the dealership for service and they suggested the inspectionII, however I'm not sure that I should have that done at this time. any suggestions?

Well, if you just bought it, I don't really see how it could hurt anything...and if I were you I'd try to find a good indie place for your service, unless you're quite teh baller of course

... they suggested the inspection II, however I'm not sure that I should have that done at this time. any suggestions?
Is the Inspection light on? If the car was serviced regularly at a BMW dealership...they can pull up the service history to see when the last Oil Service, Inspection, or the brake fluid and coolant change services were done. This should give you an idea of what you should do. If the car got serviced regularly and the Inspection light isn't on...why are they wanting you to do an Insection II (it's the most expensive)? Also, at 100k, there are some maintenance things you should take care of like 02 sensors, change the brake fluid, and do a coolant flush (the last 2 should be done on a biennial schedule).

How many green lights are showing on your service indicator? Or is the amber or red INSPECTION light lit?
http://www.savagebmw.com/images/service_normal.gif http://www.savagebmw.com/images/service_oil.gif http://www.savagebmw.com/images/service_inspection.gif http://www.savagebmw.com/images/service_overdue.gif

Here's some info on what mileage and inspection should be done (this info is also in the service booklet that is in the leather (vinyl) binder with the owners manual...and 100k for a 2001 (under normal circumstances) should be either an Oil Inspection or Inspection I...an Inspection II for your car should be done approx around 120k...check out the info at these sites:

http://www.savagebmw.com/Service/content_service_Intervals.htm
http://www.savagebmw.com/Service/content_service_IntervalsLED.htm
http://www.bimmerzone.com/inspection.htm

If you haven't read the info in your owners manual and service booklet...you really should take the time to do so (or read the info at the links above)...to depend upon the word of your dealer alone...may cost you more money than what you should have to pay.

But, I'm not knocking changing some of the pertinent fluids etc if you are unsure of the car's history. :D