Some shared history between these two Motorsport cars was that they never got the 24 valve 3.5 liter. The super valuable CSL never even got the 3.5 motor, the best it had was the 206 hp 3.2 liter to help homologate the racing CSL engine.
Even later with the e12, BMW didn't make the M88 in wet sump form, and it only had a 9:1 compression ratio, while the M90 had 9.3. So if BMW had gone to the trouble of doing a wet sump M1 engine for the e12, the M535i would have been much more expensive and only 5 mph faster. And Motorsport were too busy building M88s to homologate the M1 anyway.
By the time the e28 came along the M88 had a wet sump and a 10.5:1 compression ratio, plus Bosch DME which made fitting it to the 5 series worthwhile.