Originally Posted by clar
The S54 was never based on the M54. The S54 was improved from the S52, which was the engine used by the E36 M3 in Europe. The S52/S54 engine were bespoke M engines with no relation to the M series engines used on series cars from what i know.
While the S54 was indeed an updated version of the S52 and was not based on the M54, the S52 you guys had in the US and the European S50 were both based on the M50 and were not bespoke engines. As such the S54 is just an updated version of an engine that was itself a performance version of a regular AG one.