Chuck, have you checked to make sure the radiator is completely full? I'm not sure what all is involved with the conversion but i'd assume that the original (e30) heater box is used with the newer engine. Your problem is similar to a problem that my wife's E36 318i recently had. Her heater would only work at highway speeds though, which is opposite of what you have, but the heater box would make noises. When I checked the radiator it was low. I replaced that waterpump because of the plastic impeller (which was missing a very small piece),new radiator, belts and all is now perfect and there are no heater box noises. If your coolant is low you may have a very small radiator leak (ours was unnoticable until the new waterpump was installed). How long after the conversion did you start hearing the noise? Maybe your hearing a piece of the old plastic impeller rattling around.