Hi ray.
I faced the same dilemma a few months ago when purchasing my 328i. had a choice of 2, a 96 model (which i ended up buying) and a 98 model.
Apparently models from 1995 up to ??/1997 (i know the change from alloy to cast iron occured in 1997, not too sure which month though) had aluminium blocks, while models produced thereafter has cast iron blocks. From what i heard the amount of sulphur in our sub grade fuel (at the time) was reacting negativley with the nikasil bore liners that were used in the alloy blocks, therefore causing pre mature wear, so BMW started using cast iron blocks, introduced as a running change.
I was told that if the alloy block was still fine at this point, then it shouldnt be much of an issue, as the quality our fuel improved a great deal since then.
Apart from slight smoking now and again (still trying to figure out why), I dont have any other issues with the alloy block in my 328i.
Hope this helps
Cheers