does anyone know how to repair the slop in the gear lever of a 1988 535i manual?

Replace the shifter with a factory M3 shifter. You will get a short throw shifter at 1/4 the cost of the aftermarket units. Here are the parts you need :

1.e36 M3 Factory shift lever
2.new shift knob ( your choice, existing e34 one is probably a little loose
3. set of UUC delrin carrier bushings (http://www.uucmotorwerks.com/)
4.factory e34 shifter cup, white plastic its what the shifter seats into.
5.new tranny coupler , fits on transmission its what the rod from the shifter itelf hooks into.

I did all of this for under $100 and it worked out great !

Derek A
90 535i