You've got three areas of trouble:
1) shifter - your shifter is shot. That's part #5 in the diagram posted previously.
2) selector rod joint - parts 12, 13, 14 in the diagram.
3) transmission - that shifter-flop is not good news. It's the detent springs which can be repaired, but not easily. You can ignore it, it's not going to affect the actual gears and won't leave you stranded. You might be better off locating a guaranteed used transmission, $500-$900.
Both #1 and #2 problems will recur with mileage, 90% of your current sloppiness within 6-12 months. Not surprisingly, I feel using replacement OE shifter components is a waste of money... why buy something designed to wear out so quickly?
As a permanent solution to the worn selector joint and worn shifter lower pivot bushings, we offer the DSSR:
http://www.uucmotorwerks.com/dssr/
The DSSR works perfectly even with your OE BMW shifter and is a great "shifter fix" solution for someone who doesn't want to spend a lot of money, wants a permanent fix, and does not want the SSK.
- Rob