Yes they are chain driven, and the earlier ones have duplex chains that will out-last the engine as long as the oil is changed on schedule... 300k miles is not unheard of!
I owned a 540i which is a V8, as is the 535i, same block but about 60 BHP power difference. You can get the 540i with a 6-speed gearbox, and it's a great cruiser, much more torquey than the 3.0 Omega, and it's got noticably more top-end too being a 32V engine that peaks around 6,000 RPM. Very well put together too. I'd imagine the 535i is much the same, but a bit less power, probably lower spec, and I think they were 5-speed too. Sport spec is best, you get nicer seats, better suspension and they look better too (different bumpers). I expect 535i and above will all be at least SE spec so most of the toys inc leather will be standard.
If I could find a good 6-speed 540i at the right price I'd have another in a heartbeat. It was a great car which handles really well for its size, and the engine is a great combination of lazy torque but also top-end power when you want to drop a few cogs and thrash it a little. A lot more expensive than the Omega, yes, but personally I think it's a much better car -- the engine alone is a huge bonus, on the Omega the 3.0 is underpowered for the top spec model on a car weighing 1650 Kg.