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How do the M88 and S38 engines differ?
The M88 is the non-catalyst version of the S38 engine. With a 10.5:1 compression ratio, 264-degree camshafts, and a single-row timing chain, it is identical to the one found in the non-catalyst versions of the E24 M635CSi coupe. Power is rated at 286 hp (DIN) at 6,500 rpm with 251 lb/ft of torque at 4,500 rpm. The M88 can be identified by the BMW Roundel and only the words “M Power" on its valve cover.
The S38 s the “clean” version of the M88 motor, introduced to allow E28 M5s sold in the United States and Canada to comply with North American emissions regulations. It utilizes a duplex (double-row) timing chain, 248-degree camshafts, and features a lower 9.8:1 compression designed to work with catalytic converters. This reduced the horsepower to 256 hp (SAE) or 260 hp (DIN) at 6,500 rpm and torque to 243 lb/ft at 4,500 rpm. The S38 can be identified by the words "BMW M Power" on its valve cover.
http://www.bmwmregistry.com/model_faq.php?id=7
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