I just got back last night from picking up my 92 525iT. It did fantastic halfway back (approx. 250miles), other than a nasty power steering leak (SLS, I went through a solid 2gal of oil in the 500miles home).

But, once I hit the halfway mark home, things starting getting ugly. The tach would go to zero, the MPG gauge would die, and the brake fluid light would come on going down the road (at the same time). When this happened the car would feel like it lost a lot of power, and would begin surging, and if I stopped or dropped to about 10mph, it would die.

I am thinking something is grounding out, or a few sensors are going bad and freaking out the computer. Where should I start to look for what would be causing all of this?

Also, the tachometer does not work. It stay just under 2k rpm as soon as the key is turned on, and doesn't move (until the car starts freaking out like I said above).

Before this started to happen, I was falling in love with the ride, and highway power of the E34!!

Get a multimeter and start checking sensors, in fact, check everything. If you have something grounding out, that could be throwing things out of wack. I had that happen once and it was not as severe as your case.